Question

Anwesha intended to open a Recurring Deposit account of ₹ 1000 per month for 1 year in a Bank, paying a 5% per annum rate of simple interest. The bank reduced the rate to 4% per annum. How much must Anwesha deposit monthly for 1 year so that her interest remains the same?

Options

• ₹ 12325

• ₹ 1250

• ₹ 1200

• ₹ 1000

Answer 1

₹ 1250

Explanation:

Let K be the common time-factor for the monthly deposits same in both cases.

Original interest = `1000 xx 5/100 xx K`. 

New interest = `x xx 4/100 xx K`. 

Equating gives `x = 1000 xx 5/4 = 1250`

So, she must deposit ₹ 1250 per month to keep the interest unchanged.