Question

Mr. Tiwari receives Rs 6455 at the end of one year at the rate of 14% per annum in a recurring deposit account. What is his monthly installment?

• A. Rs 400
• B. Rs 500
• C. Rs 800
• D. Rs 700

Answer 1

The correct option is B

Rs 500

Suppose Mr. Tiwari deposited Rs 100 per month, P = Rs 100

Since the number of months (n) = 12 and rate of interest (r) = 14%

Interest (I) = P $\times$ n(n+1)/(2$\times$12) $\times$ r/100

= Rs 100 $\times$ (12$\times$13)/(2$\times$12) $\times$ 14/100 = Rs 91

As the money deposited in 12 months = 12 $\times$ Rs 100 = Rs 1200

Maturity value = Rs (1200 + 91) = Rs 1291

By applying unitary method, we get:

When the maturity value is Rs 1291, monthly installment = Rs 100

When the maturity value is Rs 6455, monthly installment = Rs 100/1291 $\times$ 6455 = Rs 500.