Question

Peter has a recurring deposit account in Punjab National Bank at Sadar Bazar, Delhi for 4 years at 10% p.a. He will get Rs 6,370 as interest on maturity. Find

1. monthly installment
2. the maturity value of the account.

Answer 1

1. Given,

Simple Interest = 6370

Interest Rate = 10%

Time Period = 4 years = 48 months

We know that

Simple interest = `P xx R/100 xx (n(n + 1))/(2 xx 12)`

Where P is the monthly installment

6370 = `P xx 10/100 xx (48 (48 + 1))/(24)`

6370 = P × 0.1 × 98

P = 650

2. Maturity value = Total money deposited + Interest

Total money deposited = Monthly installment × Number of months

= 650 × 48

= 31200 rupees

Maturity value of the account

= 31200 + 6370

37570 rupees

Hence, the monthly installment is 650 rupees and the maturity value of the account is 37570 rupees.