Question

Punam opened a recurring deposit account with Bank of Baroda for `1 1/2` years. If the rate of interest is 6% per annum and the bank pays ₹ 11313 on maturity, find how much Punam deposited each month?

Answer 1

Given:

Monthly instalment = P (₹)

Time = `1 1/2` years = 18 months (n = 18)

Rate = 6% p.a. (R = 6)

Maturity amount = ₹ 11,313

Step-wise calculation:

1. Formula for a recurring deposit (monthly instalments):

Interest = `P × [(n(n + 1))/2] × [R / (12 × 100)]`

Maturity (amount) = `P xx n + P xx [(n(n + 1))/2] xx [R/(12 xx 100)]`

2. Substitute n = 18 and R = 6%:

Interest term = `P xx ((18 xx 19)/2) xx (6/(12 × 100))` 

= `P xx ((342)/2) xx (6/(1200))` 

= P × 171 × 0.005

= P × 0.855

Maturity = 18P + 0.855P

= 18.855P

3. Set maturity = ₹ 11,313:

18.855P = 11,313

`P = (11,313)/(18.855)` 

P = 600

Punam deposited ₹ 600 each month.