Question

Neema had a recurring deposit account in a bank and deposited ₹ 600 per month for `2 1/2` years. If the rate of interest was 10% per annum, find the maturity value of this account.

Answer 1

Given:

Monthly deposit (P) = ₹ 600

Time = `2 1/2` years = 2.5 × 12 = 30 months (n = 30)

Rate of interest = 10% p.a. (simple interest on recurring deposits)

Step-wise calculation:

1. Interest on whole deposit (simple-interest RD formula):

`I = P xx (n(n + 1))/(2 × 12) xx r/100`

2. Substitute values:

n(n + 1) = 30 × 31

= 930

2 × 12 = 24

So, factor = `930/24`

= 38.75

3. `I = 600 xx 38.75 xx 10/100` 

= 600 × 3.875

= ₹ 2,325

4. Total principal deposited = P × n

= 600 × 30

= ₹ 18,000

5. Maturity value (MV) = Principal + Interest

= 18,000 + 2,325

= ₹ 20,325

The maturity value of Neema’s recurring deposit account = ₹ 20,325.