Question

Rohit has a recurring deposit account in State Bank of India. He deposits ₹ 2500 per month for a time period of 2 years. At the time of maturity he receives ₹ 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 = ₹ 2500

Time = 2 years = 2 × 12 = 24 months $\therefore$ n = 24

Let the rate of interest be r

Amount received on maturity = ₹ 66250

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

Interest = P $\times$ $\frac{n\times (n+1)}{2\times 12}$ $\times$ $\frac{r}{100}$

= 2500 $\times$ $\frac{24\times (24+1)}{2\times 12}$ $\times$ $\frac{r}{100}$

Amount = 60000 + 625r $\Rightarrow$ 66250 = 60000 + 625r

Or, 6250 = 625r $\Rightarrow$ r = 6250/625 = 10

Therefore interest paid by the bank = Maturity Amount - Money Deposited = 66250 - 60,000 = ₹ 6250

Rate of interest = 10% p.a.