Calculate interest on drawings if an amount of ₹7,500 is withdrawn at the end of every two months during the year. Rate of interest on drawing is 8% p.a.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → ₹1,500
Drawings at the end of every two months = 6 drawings of ₹7,500 = ₹45,000 in the year
Months for which each drawing stays withdrawn: 10, 8, 6, 4, 2 and 0
Average period = (10 + 0) ÷ 2 = 5 months
Interest on drawings = ₹45,000 × 8/100 × 5/12 = ₹1,500