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If annual interest at 12.5% is payable on ₹88,000 in a partner’s loan account, what will be the amount of interest?

Answer and explanation

Correct answer: ₹11,000

Interest = loan amount × rate = ₹88,000 × \(12.5/100\) = ₹11,000. Therefore, ₹11,000 is the correct answer. ₹12,000 would correspond to a rate of about 13.64%, so it is not correct. Exam tip: use \(12.5\% = 1/8\) for quick calculations.

Related tags

Partner Loan AccountInterest CalculationPartnership AccountingRetirement Of PartnerPercentage CalculationPartner's Loan AccountPartner S Loan AccountReconstitution Retirement Or Death Of A Partner

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