Question

Sanjeev deposits Rs. 500 per month in a recurring deposit account for 12 months. Find the amount he will receive at the time of maturity if the rate of interest is 10% per annum.

Answer 1

Step 1:

Given data:

Installment per month, $\left(P\right)=\mathrm{Rs}.500$

Rate of Interest, $\left(I\right)=10\%$

Number of months, $\left(n\right)=12$

Step 3:

Calculate maturity value:

Maturity amount of Sanjeev’s deposit,

$$\begin{gathered} \mathrm{Maturity}\mathrm{amount}=\mathit{[}\mathit{1}\mathit{+}\frac{\left(n+1\right)\mathit{R}}{\mathit{2400}}\mathit{]}\mathit{\times }n\mathit{\times }P \\ =\left[1+\frac{\left(12+1\right)10}{2400}\right]\times 12\times 500 \\ =\left[1+\frac{13\times 10}{2400}\right]\times 12\times 500 \\ =\left[1+\frac{130}{2400}\right]\times 12\times 500 \\ =\left[1+\frac{130}{2400}\right]\times 6000 \\ =\left[\frac{2400+130}{2400}\right]\times 6000 \\ =\frac{2530}{2400}\times 6000 \\ =\mathrm{Rs}.6325 \end{gathered}$$

Hence, the maturity amount of Sanjeev's deposit is $\mathrm{Rs}.6325$.