Question

Anamika and Monika are partners in a firm. Anamika withdrew ₹ 25,000 at the end of each month, and interest on drawings was calculated at ₹ 8,250 at the end of the year. What is the rate of interest on drawings?

Answer 1

Interest on drawings = ₹ 8,250

Anamika withdrew ₹ 25,000 at the end of each month.

There are 12 months in a year.

Total drawings = 25,000 × 12

= ₹ 3,00,000

Let the rate of interest be x% p.a.

Since drawings are made at the end of each month:

Average period = `(12 - 1)/2`

= `11/2`

= 5.5 months

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

8,250 = `3,00,000 xx x/100 xx 5.5/12`

8,250 = 1375x

x = `(8,250)/1375`

x = 6

Hence, the rate of interest is 6% p.a.