Question

Rohit has a recurring deposit account in State Bank of India. He deposits Rs 2500 per month for a time period of 2 years. At the time of maturity he receives Rs 66250. What is the interest paid by the bank? Also calculate the rate of interest.

• A. Rs 6250, 7%
• B. Rs 6250, 10%
• C. Rs 5850, 8%
• D. Rs 5850, 9.5%

Answer 1

The correct option is B

Rs 6250, 10%

Monthly deposit = Rs 2500

Time = 2 years = 2 × 12 = 24 months

Therefore, n = 24

Rate (r) =?

Amount received on maturity = Rs 66250

Amount deposited in 24 months = Rs 2500 × 24 = Rs 60000

Equivalent principal for 1 month = $\frac{n(n+1)}{2}$ × P

= $\frac{24(24+1)}{2}$ $\times$ 2500 = 12$\times$ 25 $\times$ 25000

Interest = Rs 12 $\times$25 $\times$2500$\times$ r $\times$1/ (100 $\times$12) = Rs 625r

Amount = 60000 + 625r

Or, 66250 = 60000 + 625r

Or, 6250 = 625r

r = 6250/625 = 10

Therefore interest paid by the bank = 625 $\times$10 = Rs 6250

Rate of interest = 10% p.a.