Question

Find out the rate of interest on drawings in the following cases:

1. Saavi, a partner in a firm, withdrew ₹ 30,000 per quarter in the beginning of each quarter, and interest on drawings was calculated at ₹ 6,750 at the end of the year.
2. Asmi, a partner in a firm, withdrew ₹ 15,000 at the end of each month, and interest on drawings was calculated at ₹ 6,600 at the end of the year.

Answer 1

Let the rate of interest be x%.

i. Saavi withdrew ₹ 30,000 per quarter at the beginning of each quarter.

Total drawings during the year = 30,000 × 4

= ₹ 1,20,000

Interest on drawings = ₹ 6,750

Average period (beginning of each quarter) = 7.5 months

Interest on drawings = `"Total drawings" xx "Rate of interest"/100 xx "Average period"/12`

`6,750 = 1,20,000 xx x/100 xx 7.5/12`

6,750 = 100x × 7.5

6,750 = 750x

x = `(6,750)/750`  

x = 9% p.a.

ii. Asmi withdrew ₹ 15,000 per month at the end of each month.

Total drawings during the year = 15,000 × 12

= ₹ 1,80,000

Interest on drawings = ₹ 6,600

Average period (end of each month) = 5.5 months

Interest on drawings = `"Total drawings" xx "Rate of interest"/100 xx "Average period"/12`

`6,600 = 1,80,000 xx x/100 xx 5.5/12`

`6,600 = 1,80,000 xx (5.5 x)/1200`

6,600 = 150 × 5.5x

6,600 = 825x

x = `(6,600)/825`

x = 8% p.a.