What time would be taken into consideration for calculation of interest on drawings if equal monthly amount is drawn as drawing at the beginning of each month ?

7 months

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6 months

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5 months

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6.5 months

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Solution

The correct option is D 6.5 months
If the fixed amount withdraw in the beginning of every month, then interest on the total amount of drawing will be calculated for the 6.5 months.
Average period calculated as:

Time left after first drawing +Time left after last drawing
= ------------------------------------------------------------------------------------------
2
12+1
= ----------
2

= 6.5 Months.

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