Calculate interest on drawing if Ram withdrew ₹3,000 per month at the beginning of each month for the whole year, if interest on drawing is charged @ 9% per annum.
Answer & explanation
Correct answer: option 4
The correct answer is option 4- ₹1,755.
* Calculation of average period:
Ist drawing = 1st April, so months left after it are 12.
Last drawing = 1st March, so months left after it are 1.
Average Period = (No. of months left after 1 drawings + No. of months left after last drawings)/2
= (12+1)/ 2
= 6.5 months
* Ram drawings per month = 3,000
Total drawings in the year = 3,000 x 12
= 36,000
* Interest rate = 9% p.a.
* Interest on drawings = Total drawings x (Average period/12) x (Interest rate/100)
= 36,000 x (6.5/12) x (9/100)
= 1,755
Thus, interest on Ram's Drawings is 1,755.