Multiple choice

A man deposited Rs. 1200 in a recurring deposit account for 1 year at 5% per annum simple interest. The interest earned by him on maturity is:

  1. Rs. 14,790

  2. Rs. 390

  3. Rs. 4680

  4. Rs. 780
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

For a recurring deposit of Rs. 1200 per month for 1 year at 5% simple interest, the interest is calculated on the sum of monthly balances. The total principal is 1200*12 = 14400. The equivalent principal for one month is 1200 * (12*13/2) = 93600. Interest = (P * R * T) / 100 = (93600 * 5 * 1) / (100 * 12) = 390.

AI explanation

A recurring deposit account pays interest on the held balance, calculated using the formula (P x n(n+1) x r) / (2 x 12 x 100). Assuming the standard monthly deposit of Rs. 1200 for one year, the interest equals (1200 x 12 x 13 x 5) / (2 x 12 x 100), which yields Rs. 390.

Keep practicing — related questions