Calculate interest on drawings if an amount of ₹7,500 is withdrawn at the end of bimonthly for the year.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.
Bimonthly drawings means drawings are made after every two months. So, drawings are made 6 times in 1 year.
Total Drawings = 7,500 × 6
= 45,000
Rate = 8% p.a.
Average Period (Months) = $\frac{\text{Months left after ist drawing + Months left after last drawing}}{2}$
$=\frac{10+0}{2}$ = 5 months
Interest on drawings = Total drawings × $\frac{\text{Rate of interest}}{100} × \frac{\text{Average period}}{12}$
= $45,000 \times \frac{8}{100} \times \frac{5}{12} = ₹1,500$