Peter has a recurring deposit account in Punjab National Bank at Sadar Bazar, Delhi for 4 years at 10% p.a. He will get Rs 6,370 as interest on maturity. Find
1) monthly installment
2) the maturity value of the account.
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Solution
1) Let the monthly installment be Rs P
n = 4 year = `4 xx 12` months = 48 months
Rate of Interest, r = 10%
Interest = Rs 6370
Now, Interest = `P xx (n(n+1))/(2 xx 12) xx r/100`
`=> 6370 = P xx (48 xx 49)/24 xx 10/100`
`=> 6370 = P xx 49/5`
`=> P = (637 xx 5)/49 = Rs 650`
Thus the monthly instalment is Rs 650
2) Total money deposited in bank = 48 x Rs 650 = Rs 31200
∴ Maturity value = Total money deposited + Interest
= Rs 31200 + 6370
= Rs 37570
Concept: Computation of Interest
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