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Mathematics

Mohit deposited ₹2,000 per month in a recurring deposit account on which the bank pays an interest of 10% per month.

Assertion (A): The total sum deposited in 1121\dfrac{1}{2} years = ₹36,000.

Reason (R): Maturity value of this account = ₹36,000 + Interest on it.

  1. A is true, R is false.

  2. A is false, R is true.

  3. Both A and R are true and R is the correct reason for A.

  4. Both A and R are true and R is the incorrect reason for A.

Banking

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Answer

Both A and R are true and R is the incorrect reason for A.

Reason

According to Assertion:

Given, P = ₹2,000, n = 1121\dfrac{1}{2} years = 32\dfrac{3}{2} years = 32×12\dfrac{3}{2} \times 12 months = 18 months

and

r = 10%

Sum deposited = P × n = ₹ 2,000 × 18 = ₹ 36,000

So, Assertion(A) is true.

According to Reason:

"Maturity value of this account = ₹36,000 + Interest on it."

For a recurring deposit, the maturity value is the sum of all deposits plus the accrued interest.

So, Reason (R) is true in stating how the maturity amount is calculated.

However, using the maturity value formula doesn't really explain why the total deposit is ₹36,000. That amount simply comes from multiplying the monthly payment by the number of months.

Hence, both A and R are true and R is the incorrect reason for A.

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