Question

Mr. Jacob has a 5 years recurring deposit account in Bank of Baroda and deposits ₹ 2400 per month. If he receives ₹ 186090 at the time of maturity, find:

1. the rate of (simple) interest.
2. the total interest earned by Mr. Jacob.

Answer 1

Given:

Monthly deposit P = ₹ 2400

Time n = 5 years = 60 months

Maturity value (MV) = ₹ 186090

Total Deposit

= P ⋅ n

= 2400 ⋅ 60

= ₹ 144000

Interest earned

I = MV − Total Deposit

= 186090 − 144000

= ₹ 42090

`I = (Pxxn(n+1)xxr)/(2xx12xx100)`

`=> 42090 = (2400xx60xx61xxr)/2400`

`42090 = (60xx61xxr)/1`

`=> 42090 = 3660r`

`=> r = 42090/3660`

= 11.5%