SOLUTION
Total Drawings = 7,500 × 4 = Rs. 30,000
Interest Rate = 10% p.a.
Case (a)
When equal amount is withdrawn in the beginning of each quarter, the interest on drawings is calculated for an average period of 7.5 months
Interest on drawing = total drawing × Rate of drawing / 100 × Average month / 12
Interest on Ashok’s drawing = 30,000 × 10 / 100 × 7.5 / 12 = 1,875
Case (b)
When equal amount is withdrawn at the end of each quarter, the interest on drawings is calculated for an average period of 4.5 months
Interest on drawing = total drawing × Rate of drawing / 100 × Average month / 12
Interest on Ashok’s drawing = 30,000 × 10 / 100 × 4.5 / 12 = 1,125
Case (c)
When equal amount is withdrawn in the middle of each quarter, the interest on drawings is calculated for an average period of 6 months
Interest on drawing = total drawing × Rate of drawing / 100 × Average month / 12
Interest on Ashok’s drawing = 30,000 × 10 / 100 × 6 / 12 = 1,500