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If A’s average capital is ₹90,000 and the rate of interest on capital is 11%, what is the interest on capital?

Answer and explanation

Correct answer: ₹9,900

The governing concept is the formula for interest on capital: Interest = Average Capital × Rate ÷ 100. Substituting the supplied figures gives ₹90,000 × 11 ÷ 100. Since 11% of ₹90,000 is ₹9,900, the interest on capital is ₹9,900 and option A is correct. Option B results from applying 10% instead of 11%. Option C treats the percentage rate as though it were a rupee amount, which is not valid. Option D represents an amount close to the capital plus interest rather than the interest alone. Because average capital is expressly provided, no separate opening or closing capital calculation is necessary.

Related tags

Average CapitalInterest On CapitalPercentage CalculationCapital AccountsPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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