Question

Determine the amount of Parnika’s quarterly drawings for the year ended 31st March, 2025 in the following cases where interest on drawings is charged @ 7% p.a.

1. When she withdrew a fixed amount in the beginning of each quarter and interest on drawings is ₹ 4,375.
2. When she withdrew a fixed amount at the end of each quarter and interest on drawings is ₹ 1,890.
3. When she withdrew a fixed amount during the middle of each quarter and interest on drawings is ₹ 3,150.

Answer 1

Let the total drawings during the year be x.

Rate of interest = 7% p.a.

i. Beginning of each quarter:

Interest on drawings = ₹ 4,375

Average period = 7.5 months

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

4,375 = `x xx 7/100 xx 7.5/12`

4,375 = `(7x)/100 xx 7.5/12`

4,375 = `(52.5x)/(1,200)`

x = `(4,375 xx 1,200)/52.5`

x = ₹ 1,00,000

Quarterly drawings = `(1,00,000)/4`

= ₹ 25,000 per quarter

ii. End of each quarter:

Interest on drawings = ₹ 1,890

Average period = 4.5 months

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

1,890 = `x xx 7/100 xx 4.5/12`

1,890 = `(7x)/100 xx 4.5/12`

1,890 = `(31.5x)/(1,200)`

x = `(1,890 xx 1,200)/31.5`

x = ₹ 72,000

Quarterly drawings = `(72,000)/4`

= ₹ 18,000 per quarter

iii. Middle of each quarter:

Interest on drawings = ₹ 3,150

Average period = 6 months

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

3,150 = `x xx 7/100 xx 6/12`

3,150 = `(7x)/100 xx 6/12`

3,150 = `(42x)/(1,200)`

x = `(3,150 xx 1,200)/42`

x = ₹ 90,000 

Quarterly drawings = `(90,000)/4`

= ₹ 22,500 per quarter