Question

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

• A. 7 months
• B. 6 months
• C. 5 months
• D. 6.5 months

Answer 1

The correct option is D 6.5 months

If a fixed amount is withdrawn in the beginning of every month of the calendar year, the interest on the total amount of drawings will be calculated for 6.5 months.

Average period will be calculated as:-

= Months left after first drawing + months left after last drawing

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2

= 12 + 1

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2

= 6.5 months