Question

During the financial year 2021-22, Surjeet withdrew \rupee30,000 quarterly at the beginning of every quarter. If interest to be charged is 8\% p.a., calculate the amount of interest on drawings:

• A. \rupee3,600
• B. \rupee4,800
• C. \rupee2,400
• D. \rupee6,000

Hint:

Calculate interest on each withdrawal separately considering the exact period each amount remains withdrawn.

Answer 1

The Correct Option is D

Step 1: Understand the problem
Surjeet withdraws \rupee30,000 at the beginning of each quarter, i.e., 4 withdrawals in a year. Interest rate is 8% per annum charged on drawings.
Step 2: Calculate interest on each withdrawal
Since withdrawals are at the beginning of each quarter, interest is calculated for:
1st withdrawal: 12 months
2nd withdrawal: 9 months
3rd withdrawal: 6 months
4th withdrawal: 3 months
Step 3: Calculate interest for each withdrawal
Interest \(= \text{Amount} \times \text{Rate} \times \frac{\text{Time}}{12}\)
For 1st withdrawal: \[ 30,000 \times 8\% \times \frac{12}{12} = \rupee2,400 \] For 2nd withdrawal: \[ 30,000 \times 8\% \times \frac{9}{12} = \rupee1,800 \] For 3rd withdrawal: \[ 30,000 \times 8\% \times \frac{6}{12} = \rupee1,200 \] For 4th withdrawal: \[ 30,000 \times 8\% \times \frac{3}{12} = \rupee600 \] Step 4: Total interest on drawings
\[ \rupee2,400 + \rupee1,800 + \rupee1,200 + \rupee600 = \rupee6,000. \]