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Mr. Ashok Has an Account in the Central Bank of India. the Following Entries Are from His Passbook:If Mr. Ashok Gets Rs. 83.75 as Interest at the End of the Year Where the Interest is Compounded

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Question

Mr. Ashok has an account in the Central Bank of India. The following entries are from his passbook:

Date Particulars Withdrawals
(₹)
Deposits
(₹)
Balance
(₹)
01-01-05 B/F - - 1,200·00
07-01-05 By cash   500·00 1,700·00
17-01-05 To cheque 400·00 - 1,300·00
10-02-05 By cash - 800·00 2,100·00
25-09-05 By cheque 500·00 - 1,600·00
20-09-05 By cash - 700·00 2,300·00
21-11-05 To cheque 600·00 - 1,700·00
05-12-05 By cash - 300·00 2,000·00

If Mr. Ashok gets Rs. 83.75 as interest at the end of the year where the interest is compounded annually, calculate the rate of interest paid by the bank in his Savings Bank Account on 31st December 2005.

Sum
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Solution

Month Minimum Balance between 10th day and last day (in ₹) Qualifying Amount for interest
January 1,300 1,300
February 1,600 1,600 x 8 = 12,800
March 1,600  
April 1,600  
May 1,600  
June 1,600  
July 1,600  
August 1,600  
September 1,600  
October 2,300 2,300
November 1,700 1,700
December 2,000 2,000
Total   ₹ 20,100

Principal for 1 month = ₹ 20,100
Let x be Rate interest 
then
Interest = `(20,100 xx x xx 1)/(100 xx 12)`

∴ 83·75 = `(20,100x)/(1,200)`

x = `(83·75 xx 1,200)/(20,100)`

x = 5
∴ Rate = 5%

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