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In a recurring deposit account, John deposits ₹ 500 per month for 24 months. If the interest he earns is one-tenth of his total deposit, the rate of interest is ______.

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Question

In a recurring deposit account, John deposits ₹ 500 per month for 24 months. If the interest he earns is one-tenth of his total deposit, the rate of interest is ______.

Options

  • 4.8%

  • 9.6%

  • 7.2%

  • 3.2%

MCQ
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Solution

In a recurring deposit account, John deposits ₹ 500 per month for 24 months. If the interest he earns is one-tenth of his total deposit, the rate of interest is 9.6%.

Explanation:

P = ₹ 500,

n = 24 months,

Given I = `1/10 (500 xx 24)`

= ₹ 1200

We know that

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

`\implies 1200 = 500 xx (24 xx 25)/(2 xx 12) xx R/100`

`\implies` R = `1200 xx (2 xx 12)/(24 xx 25) xx 100/500`

∴ R = 9.6%

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