Multiple choice

A, B and C are partners. Their partnership deed provides for interest on drawings at 8% per annum. B withdraws a fixed amount in the middle of every month and his interest on drawings amounts to Rs. 4,800 at the end of the year. What is the amount of his monthly drawings?

  1. Rs. 10,000

  2. Rs. 5,000

  3. Rs. 1,20,000

  4. Rs. 48,000
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A Correct answer
Explanation

Interest on drawings for a fixed amount withdrawn in the middle of every month is calculated for 12 months. Formula: Interest = (Total Drawings * Rate * 6/12). 4800 = (x * 12 * 0.08 * 0.5), so 4800 = 0.48x, giving x = 10,000.

AI explanation

When a fixed amount is withdrawn in the middle of every month, the average period is calculated as 6.5 months, or 6.5/12 of a year. Using the interest on drawings formula, Interest = Total Drawings * Rate * Average Period, we have 4800 = Total Drawings * (8/100) * (6.5/12). Solving this gives Total Drawings = 120000. Dividing this by 12 months yields a monthly drawing amount of Rs. 10,000.

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