Question

A Drawn Rs.1000 per month on the last day of every month. If the rate of interest is 5% p.a. then the total interest or drawings will be:

• A. Rs. 325
• B. Rs. 275
• C. Rs. 300
• D. Rs. 350

Answer 1

The correct option is B Rs. 275

Interest on drawing = Total drawings x rate of interest x average period/12

= 1,000 x 12 x 5/100 x 5.5/12 (WN 1)

= 12,000 x 5% x 5.5/12

= RS-275.

Working note:-

Average period = Beginning period of use + end period of use

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2

= 11 + 0

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2

= 5.5