QQuestion
Salman deposits ₹1000 every month in a recurring deposit account for 2 years. If he receives ₹26,000 on maturity, find:
(a) the total interest Salman earns
(b) the rate of interest.
✓Answer
(a) Monthly deposit = ₹1000
Time = 2 years = 24 months
Total deposit = ₹1000 × 24
Total deposit = ₹24,000
Total interest = Maturity value − Total deposit
Total interest = ₹26,000 − ₹24,000
Therefore, total interest = ₹2000.
(b) Let the rate of interest be r% per annum.
Interest = \frac{P\times n(n+1)}{2\times12}\times\frac{r}{100}
Substituting P = 1000, n = 24 and interest = 2000:
⇒ 2000 = \frac{1000\times24\times25}{2\times12}\times\frac{r}{100}
⇒ 2000 = 1000\times25\times\frac{r}{100}
⇒ 2000 = 250r
⇒ r = \frac{2000}{250} = 8
Therefore, the rate of interest is 8% per annum.
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