#### 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

1) The interest paid by the bank

2) The rate of interest

#### 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))/(2xx12) = (24 xx 25)/(2xx12)` = 25 year

This is equivalent to depositing Rs. 2,500 for 25 yrs.

Interest = `(PxxNxxR)/100 => 6250 = (2500 xx 25 xx R)/100 => R = 10`

Thus, the rate of interest is 10%.

Is there an error in this question or solution?

#### APPEARS IN

Solution 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 1) The Interest Paid by the Bank 2) the Rate of Interest Concept: Computation of Interest.