Multiple choice

On 1.6.05 X draws a bill on Y for Rs. 25,000. At maturity, Y requests X to accept Rs. 5,000 in cash and noting charges incurred Rs. 100 and for the balance, X draws a bill on Y for 2 months at 12% p.a. Interest amount will be

  1. Rs. 410

  2. Rs. 420

  3. Rs. 440

  4. Rs. 400
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

After paying Rs. 5,000 in cash, the balance amount on which interest is calculated is Rs. 20,000 (Rs. 25,000 - Rs. 5,000). Interest for 2 months at 12% p.a. = Rs. 20,000 × 12% × 2/12 = Rs. 400. Noting charges of Rs. 100 are borne by Y and don't affect the interest calculation.

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