Recurring Deposit interest rate formula?

I want to find the rate of interest of a recurring deposit. suppose monthly inst. is Rs. 100, period is 24 months and maturity amount is Rs 2609. I want to find the Rate of interest. I want to know the formula for this. (Remember interest is quarterly compounded)

8 thoughts on “Recurring Deposit interest rate formula?

  1. 100 * (1 + r/4)^8 = 2609

    Solve for r to get a rate of 2.01 = 201% p.a.

    I don’t think i read the question right.

    I’m lookin properly at it now. You want deposits added at the start of every month correct?

    If that’s the case you’re solving an equation such as:

    (1 + r/4)^8 + … + (1 + r/4)^1 = 26.09

    Not sure how you solve that one…

    Just checked: someone else agreed with me, good luck
    solving that without a computer

    Check this out:
    http://en.allexperts.com/q/Basic-Math-657/Compound-Interest-Rate.htm

  2. monthly instalments compounded quarterly sounds very strange. its easier to work with a monthly interest rate, and then adjust using 1+quarterly = (1+monthly)^3

    let g = 1+r where r = monthly interest rate
    assuming deposits at the start of each month
    your first 100 accumulates to 100 g^24
    … you last 100 accumulates to 100 g^1
    so you have 100 g ( 1 + g + .. + g^23) = 100 g (g^24-1) / (g-1)
    which should be 2609
    so 100 (g^25 – g) = 2609 (g-1)
    or g^25 – 27.09g +26.09 = 0

    You cant solve this algebraically, but you can do it by successive approximation or other numerical methods.

  3. The general formula for compound interest is
    A = P[1 + (R/100)]^N when interest is calculated yearly basis
    In the above case the interest is calculated quarterly therefor the effective rate is r = R/4
    and the effective period = 2 × 4 = 8
    Principle = 100 × 24 = 2400
    2609 = 2400 [1 + (R/400)]^8
    or 2609/2400 = [1 + (R/100)]^N
    1.0871 = [1 + (R/100)]^N
    1.010493879 = [1 + (R/400)]
    1.010493879 – 1 = (R/400)]
    or 0.010494 = R/400
    R = 0.010494 × 400 = 4.1976 = 4.2 %

  4. The following website will provide you the exact answer you are looking for, just insert the values that you know. I started by entering an assumed interest rate of 2.5 % and finally ended with an actual value of 3.95% by incrementing it by 0.1 or 0.05 etc. Assuning that you started with 100 and deposited 100 thereafter every month for two years and your final value was 2609.

    Hope this helps.

    http://www.debtrelief.com.au/int-calc.php

  5. Hi,

    I have master degree in mathematics and I have got thirteen ten years of teaching experience in Math at college level and currently I am working as a lecturer for an army engineering college author of math guide
    contact me for solution .
    thankyou

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