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Question
Ahmed has a recurring deposit account in a bank. He deposits Rs. 2,500 per month for 2 years. If he gets Rs. 66,250 at the time of maturity, find
- The interest paid by the bank
- The rate of interest
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Solution
1. P = Rs. 2500, n = 2 years = (2 × 12) months = 24 months
Total Principal = Rs. 2,500 × 24
= Rs. 60,000
Amount = Rs. 66,250
Interest = Amount – Principal
= Rs. 66,250 – Rs. 60,000
= Rs. 6,250
Thus, the interest paid by the bank is Rs. 6,250.
2. Let r be the rate of interest.
`N = (n(n + 1))/(2 xx 12)`
= `(24 xx 25)/(2 xx 12)`
= 25 years
This is equivalent to depositing Rs. 2,500 for 25 years.
Interest = `(P xx N xx R)/100`
⇒ `6250 = (2500 xx 25 xx R)/100`
⇒ R = 10
Thus, the rate of interest is 10%.
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