Recurring Deposits — Concept and the Standard Maturity Value Formula

A Recurring Deposit (RD) works differently from an FD: instead of depositing one lump sum, the depositor pays a fixed amount every month for an agreed number of months, and the bank pays interest on each month's instalment for the time it remains on deposit. Because the first instalment stays deposited for almost the whole term while the last instalment stays deposited for only a short time, each instalment earns a different amount of interest — the standard RD maturity formula accounts for this by adding up the interest earned by every instalment.

The standard RD maturity-value formula, used platform-wide for every RD problem in this chapter, calculates the total interest as simple interest on the sum of instalment-months (the $i$-th instalment earns interest for $n{-}i{+}1$ months, so the total interest-months across all instalments add up to $1+2+\cdots+n = \dfrac{n(n+1)}{2}$):