Recurring deposit account of rupees 500 per month has a maturity value of 9570 if the rate of interest is 8 % per annum and the interest is calculated on the end of every month find the time of the RD account?
Answers
Answer:
The time of the RD account will be Rs. 3,070.78
Step-by-step explanation:
From the above question,
They have given :
The amount deposited 500 per month in a bank for 6 months in recurring deposit account.
Rate of interest is 8% per annum
The interest is calculated at the end of month.
Here we have to find,
The maturity value of her deposits
A = P (1 + R/100)ⁿ
P = 500 R = 8 % per annum = 2/3 % per month
n = from 6 to 1
Amount = 500 ( 1 + 2/300)⁶ + 500 ( 1 + 2/300)⁵ + 500 ( 1 + 2/300)¹
a = 500 ( 1 + 2/300)
r = ( 1 + 2/300) = (151/150)
n = 6
To find the time of the RD account
The minimum deposit tenure for RD accounts is six months and can go up to 10 years. RD accounts offer an interest rate higher than that of a savings account. Generally, banks compound the interest once every quarter. RD accounts come with a lock-in period of 30 days-3 months subject to the bank's discretion.
Sₙ = a(rⁿ - 1) / ( r - 1)
= 500 ( 1 + 2/300) ((151/150)⁶ - 1) / (151/150 - 1) )
= 500 * 151 * (151/150)⁶ - 1)
Sₙ = 3,070.78
The time of the RD account will be Rs. 3,070.78
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