Question

Akshit opened a savings bank account in a bank on 13 th Feb 2007 with a deposit of Rs \(1000 .\) He again deposited Rs 1000 on 9 th March 2007 . Find the amount on which he gets interest, if he closes his account on 31st March 2007 . (1) Rs 1000 (2) Rs 2000 (3) \(\operatorname{Rs} 3000\) (4) None of these

Short answer

Answer: Rs 68000

Step-by-step solution

Calculate the number of days for each deposit

First, we'll determine the number of days that elapse between each deposit and the account closure, as this will help us determine the interest amount. 1. From 13th Feb 2007 to 31st March 2007 is 46 days (16 days of Feb + 30 days of Mar). 2. From 9th March 2007 to 31st March 2007 is 22 days.

Calculate the amount on which Akshit gets interest

Akshit earns interest on each deposit for the number of days calculated in Step 1: First deposit: Rs 1000 for 46 days. Second deposit: Rs 1000 for 22 days. Now, we need to combine these amounts to find the total amount on which he gets interest. Since both deposits are for the same amount (Rs 1000), we can just multiply the amount by the total number of days interest is earned: Rs 1000 * (46 + 22) = Rs 1000 * 68 Therefore, the amount on which Akshit gets interest is Rs 68000. The correct answer is (4) None of these.

Key concepts

Banking Mathematics

Banking mathematics encompasses the mathematical techniques and calculations used within the financial sector. This includes understanding and computing interests, loans, and various financial products that banks offer. These calculations help customers and banks determine values related to deposits, loans, and rates over time.
For instance, a simple interest problem will require calculations involving principle amounts deposited at a bank, the interest rate offered, and the time for which the money is deposited. Grasping these calculations is crucial for managing personal finances and understanding how banking services can be leveraged for financial growth.

Deposit Interest

Deposit interest is the compensation a bank provides to its customers for keeping their money in a savings or fixed deposit account. It's usually expressed as a percentage of the principal amount and can be calculated using simple interest or compound interest formats.
In simple interest calculations, the formula is: \[\text{Interest (I)} = \text{Principal (P)} \times \text{Rate (R)} \times \text{Time (T)}\]
Here, time is generally in years and rate is in percentage form. This formula helps in calculating the interest earned over the period of deposit, which can be crucial for determining potential earnings from savings.

Time Period Calculation

Time period calculation is a vital aspect when it comes to banking transactions involving interest because the amount of interest earned depends on how long the deposit is held in the account. Understanding how to calculate these periods accurately is essential.
To calculate the time a deposit has been active, typically the date of deposit and the closing date are involved. For example, if a deposit is made on February 13, 2007, and the account is closed on March 31, 2007, you calculate the number of days in each month:

• February: Despite being a leap year, assume 28 days for typical calculation, with 16 days elapsed post the deposit on February 13.
• March: Full 31 days as interest is accrued up to and including March 31.

This gives a detailed breakdown of days interest is computed for, adding accuracy to the interest calculation.

Basic Arithmetic Operations

Basic arithmetic operations such as addition, subtraction, multiplication, and division are instrumental in performing financial calculations. They form the foundation upon which more complex banking computations like interest calculations are based.
For example, combining different interest periods for multiple deposits requires addition and multiplication. If an individual deposits Rs 1000 twice with different accrual periods, the formula:\[\text{Total Interest Amount} = \sum (\text{Principal} \times \text{Days})\]
is used, where each deposit period is computed separately and results are summed up. Mastery of these simple operations is vital for accurately managing and projecting financial balances and interest outcomes.