# Calculate interest on drawings of Ashok @ 10% p.a. for the year ended 31st March, 2019, in each of the following alternative cases: Case 1. If he withdrew ₹ 7,500 in the beginning of each quarter. Case 2. If he withdrew ₹ 7,500 at the end of each quarter. Case 3. If he withdrew ₹ 7,500 during the middle of each quarter.

By Ruchika|Updated : June 6th, 2023

To calculate the interest on drawings of Ashok at 10% p.a. for the year ended 31st March 2019, we will be using simple interest formula. Calculating interest on drawings is an important aspect of financial management for individuals and businesses alike. In the case of Mr. Ashok, who made withdrawals throughout the year, it becomes crucial to determine the interest incurred on these drawings. Here, we will explore three alternative cases of withdrawals: at the beginning of each quarter, at the end of each quarter, and during the middle of each quarter.

## Formula to Calculate Interest

In order to calculate the interest on Mr. Ashok's drawings at 10% p.a. for the year ended 31st March 2019, we will be using the Simple Interest formula which is:

Simple Interest (SI) = (P x R x T) / 100

where, P = principal amount, R = rate of interest, and T = time period.

## Steps to Calculate Interest for Each Case

Let's look at each case separately:

Case 1: If Ashok withdrew Rs. 7,500 at the beginning of each quarter, then his total withdrawal for the year would be:

Rs. 7,500 x 4 = Rs. 30,000

Interest Rate = 10% p.a.

To calculate the interest, we can use the simple interest formula: I = P x R x T, where I is the interest, P is the principal, R is the rate of interest, and T is the time period.

In this case,

P = Rs. 30,000, R = 10%, and T = 7.5/12

Therefore, I = 30,000 x 10/12 x 7.5/12

Total interest is Rs. 1,875.

Case 2: If Ashok withdrew Rs. 7,500 at the end of each quarter, then his total withdrawal for the year would also be Rs. 30,000. However, since the withdrawals are made at the end of each quarter, interest is calculated for a period of 4.5 months.

Hence,

Interest on drawings = 30000 x 10/100 x 4.5/12= Rs. 1,125

Case 3: If Ashok withdrew Rs. 7,500 during the middle of each quarter, then we need to assume that the withdrawals were made exactly at the midpoint of each quarter.

So, interest is calculated for a period of 6 months.

Hence,

Interest on drawings= 30000 x 6/12 x 10/100 = Rs. 1,500

Summary:

## Calculate interest on drawings of Ashok at 10% p.a. for the year ended 31 March 2019, in each of the following alternative cases:

In case 1, the interest on drawing would be Rs. 1,875, Rs. 1,125 for case 2, and Rs 1,500 for case 3. The interest is calculated using the Simple Interest formula i.e. SI = P x R x T.

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