Question

calculate interest drawing of Mr X Rate of interest 10p.a. if he withdraw 1000per month​

Answer 1

ANSWER :

• ❖ Interest on Drawings if Mr. X withdraw Rs. 1,000 per month at the beginning of each month throughout the year is Rs. 650.

• ❖ Interest on Drawings if Mr. X withdraw Rs. 1,000 per month in the mide of each month throughout the year is Rs. 600.

• ❖ Interest on Drawings if Mr. X withdraw Rs. 1,000 per month at the end of each month throughout the year is Rs. 550.

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SOLUTION :

Given :-

• Mr. X withdraw Rs. 1,000 per month.

• Rate of Interest = 10% p.a.

To Find :-

• Interest on Drawings of Mr. X = ?

Note :-

• In this question, it is not mentioned when the amount is withdrawn per month, i.e.,whether the equal amount is withdrawn at the beginning of each month or in the middle of each month or at the end of each month. Thus, there will be three different cases of calculating Interest on Drawings.

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❒ Calculation of Interest on Drawings if Mr. X withdraw the amount at the beginning of each month :-

[If fixed amount are withdrawn at the beginning of every month throughout the year, interest on the total amount of drawings is calculated for the average period; i.e., for 6 ½ months or 6.5 months.]

Here,

• Amount withdrawn per month = Rs. 1,000

∴ Total amount withdrawn throughout the year = Rs. (1,000 × 12)

➜ Total amount withdrawn throughout the year = Rs. 12,000.

• Rate of Interest on Drawings = 10% p.a.

• Time = 6.5 months

We know that,

• $\dag \: \: \underline{ \boxed{ \sf{ \: Interest \: \: on \: \: Drawings = Total \: \: Drawings \times Rate \: \: of \: \: Interest \times Time \: }}}$

Using this formula, we get,

• ★ Interest on Drawings = Total Drawings × Rate of Interest × Time

➨ Interest on Drawings = Rs. 12,000 × 10% × 6.5 months

➨ Interest on Drawings = Rs. 12,000 × $\sf{\dfrac{10}{100}}$ × $\sf{\dfrac{6.5}{12}}$

∴ Interest on Drawings = Rs. 650

• Hence, Interest on Drawings if Mr. X withdraw the amount at the beginning of each month is Rs. 650.

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❒ Calculation of Interest on Drawings if Mr. X withdraw the amount in the middle of each month :-

[If fixed amount are withdrawn on the middle of every month throughout the year, interest on the total amount of drawings is calculated for the average period; i.e., for 6 months.]

Here,

• Amount withdrawn per month = Rs. 1,000

∴ Total amount withdrawn throughout the year = Rs. (1,000 × 12)

➜ Total amount withdrawn throughout the year = Rs. 12,000.

• Rate of Interest on Drawings = 10% p.a.

• Time = 6 months

We know that,

• $\dag \: \: \underline{ \boxed{ \sf{ \: Interest \: \: on \: \: Drawings = Total \: \: Drawings \times Rate \: \: of \: \: Interest \times Time \: }}}$

Using this formula, we get,

• ★ Interest on Drawings = Total Drawings × Rate of Interest × Time

➨ Interest on Drawings = Rs. 12,000 × 10% × 6 months

➨ Interest on Drawings = Rs. 12,000 × $\sf{\dfrac{10}{100}}$ × $\sf{\dfrac{6}{12}}$

∴ Interest on Drawings = Rs. 600

• Hence, Interest on Drawings if Mr. X withdraw the amount at the end of each month is Rs. 600.

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❒ Calculation of Interest on Drawings if Mr. X withdraw the amount at the end of each month :-

[If fixed amount are withdrawn at the end of every month throughout the year, interest on the total amount of drawings is calculated for the average period; i.e., for 5 ½ months or 5.5 months.]

Here,

• Amount withdrawn per month = Rs. 1,000

∴ Total amount withdrawn throughout the year = Rs. (1,000 × 12)

➜ Total amount withdrawn throughout the year = Rs. 12,000.

• Rate of Interest on Drawings = 10% p.a.

• Time = 5.5 months

We know that,

• $\dag \: \: \underline{ \boxed{ \sf{ \: Interest \: \: on \: \: Drawings = Total \: \: Drawings \times Rate \: \: of \: \: Interest \times Time \: }}}$

Using this formula, we get,

• ★ Interest on Drawings = Total Drawings × Rate of Interest × Time

➨ Interest on Drawings = Rs. 12,000 × 10% × 5.5 months

➨ Interest on Drawings = Rs. 12,000 × $\sf{\dfrac{10}{100}}$ × $\sf{\dfrac{5.5}{12}}$

∴ Interest on Drawings = Rs. 550

• Hence, Interest on Drawings if Mr. X withdraw the amount at the end of each month is Rs. 550.