Question

Ramu deposited Rs. 400 per month in a recurring deposit account for 2 years at 9% pa. Somu deposited Rs. 400 per month in a recurring deposit account for $2\frac{1}{2}$ years at 12% pa. Which of the following can be concluded about the interests to be paid to them on maturities of their deposits ?

• A. Ramu must be paid an interest of Rs. 860 less than that of Somu
• B. Ramu must be paid an interest of Rs. 960 less than that of Somu.
  
• C. Ramu must be paid an interest of Rs. 916 less than that of Somu.
  
• D. Ramu must be paid an interest of Rs. 816 less than that of Somu.
  

Answer 1

Answer: (B)

Ramu must be paid an interest of Rs. 960 less than that of Somu.

Time periods of Ramu's account and Somu's account are 2 years, i.e., 24 months and $2\frac{1}{2}$ years, i.e., 30 months, respectively.

Interest to be paid to Ramu

$=\frac{400\left(24\right)\left(25\right)}{2}\left(\frac{1}{12}\right)\left(\frac{9}{100}\right)=900$

Interest to be paid to Somu

$=\frac{400\left(30\right)\left(31\right)}{2}\left(\frac{1}{12}\right)\left(\frac{12}{100}\right)=1,860$

Interest to be paid to Ramu is less than that to be paid to Somu by Rs. 960.