CA Foundation Exam > CA Foundation Questions > On 1.1.05 X draws a bill Y for Rs. 10,000. At...
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On 1.1.05 X draws a bill Y for Rs. 10,000. At maturity Y request X to renew the bill for 2 months at 12% p.a. interest. Amount of interest will be:
- a)Rs.200
- b)Rs.150
- c)Rs.180
- d)Rs.190
Correct answer is option 'A'. Can you explain this answer?
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On 1.1.05 X draws a bill Y for Rs. 10,000. At maturity Y request X to ...
Calculation of Interest on Renewal of Bill:
- The original bill drawn by X on 1.1.05 for Rs. 10,000 matures after a certain period.
- Y requests X to renew the bill for an additional period of 2 months at the rate of 12% p.a.
- The amount of interest to be paid on the renewed bill can be calculated as follows:
- The interest rate is 12% p.a. for a period of 2 months, which is equivalent to 1/6th of a year.
- Therefore, the interest rate for the 2-month period is (12/100) * (1/6) = 1/50 or 0.02.
- The principal amount on the renewed bill is still Rs. 10,000.
- So, the interest payable on the renewed bill is (0.02 * 10,000) = Rs. 200.
Hence, the correct answer is option 'A' - Rs. 200.
- The original bill drawn by X on 1.1.05 for Rs. 10,000 matures after a certain period.
- Y requests X to renew the bill for an additional period of 2 months at the rate of 12% p.a.
- The amount of interest to be paid on the renewed bill can be calculated as follows:
- The interest rate is 12% p.a. for a period of 2 months, which is equivalent to 1/6th of a year.
- Therefore, the interest rate for the 2-month period is (12/100) * (1/6) = 1/50 or 0.02.
- The principal amount on the renewed bill is still Rs. 10,000.
- So, the interest payable on the renewed bill is (0.02 * 10,000) = Rs. 200.
Hence, the correct answer is option 'A' - Rs. 200.
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Community Answer
On 1.1.05 X draws a bill Y for Rs. 10,000. At maturity Y request X to ...
12% interest on 10000 would be 1200. but this amount of interest is for the whole year. And the duration of the bill is 2 months. therefore for 2 months, the interest would be 200rs. hence the answer is option A
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On 1.1.05 X draws a bill Y for Rs. 10,000. At maturity Y request X to renew the bill for 2 months at 12% p.a. interest. Amount of interest will be:a)Rs.200b)Rs.150c)Rs.180d)Rs.190Correct answer is option 'A'. Can you explain this answer?
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