RD stands for Recurring Deposit, which is a type of savings scheme offered by banks and post offices in India. In an RD account, a fixed amount of money is deposited at regular intervals (usually monthly) for a fixed period of time, and interest is earned on the accumulated amount.
To calculate the maturity value of an RD account, you can use the following formula:
M = R x [(1 + i)^n – 1]/(1 – (1 + i)^(-1/3))
M: Maturity value of the RD account
R: Monthly deposit amount
i: Rate of interest per annum (expressed as a decimal)
n: Number of quarters (i.e. 3-month periods) for which the RD account is held
Here is an example of how to use this formula:
Suppose you invest Rs. 5,000 per month in an RD account for 3 years at an interest rate of 6% per annum. Here’s how you can calculate the maturity value of your RD account:
i = 6% per annum = 0.06/4 per quarter (quarterly interest rate)
n = 3 years x 4 quarters per year = 12 quarters
M = 5,000 x [(1 + 0.06/4)^12 – 1]/(1 – (1 + 0.06/4)^(-1/3))
M = Rs. 1,92,427.06
Therefore, the maturity value of your RD account after 3 years of investment would be Rs. 1,92,427.06.