Question

Shruti and Gayatri are partners in a firm. Shruti withdrew ₹ 60,000 at the end of each quarter, and interest on drawings was calculated to be ₹ 6,300 at the end of the year. What is the rate of interest on drawings?

Answer 1

Interest on drawings = ₹ 6,300

Shruti withdrew ₹ 60,000 at the end of each quarter.

There are 4 quarters in a year.

Total drawings = 60,000 × 4

= ₹ 2,40,000

Let the rate of interest be x%.

Since drawings are made at the end of each quarter:

Average period = `(12 - 3)/2`

= `9/2`

= 4.5 months

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

`6,300 = 2,40,000 xx x/100 xx 4.5/12`

6,300 = 900x

x = `(6,300)/(900)`

x = 7

Hence, the rate of interest is 7% p.a.