Question

Ashima has a Cumulative or Recurring Deposit Account in a bank for 5 years at 9% p.A. At the time of maturity, she gets 51,607.50. Find the monthly instalment.

Answer 1

Monthly deposit= $684.23

Explanation:

Giving the following information:

Number of periods= 5*12= 60 months

Interest rate= (0.09/12)= 0.0075

Future value= $51,607.5

To calculate the monthly deposit, we need to use the following formula:

FV= {A*[(1+i)^n-1]}/i

A= monthly deposit

Isolating A:

A= (FV*i)/{[(1+i)^n]-1}

A= (51,607.5*0.0075) / [(1.0075^60) - 1]

A= $684.23