Question

Give the average perios, in months, for charging interest on drawings of a fixed amount withdrawn at the beginning of each half-year.​

Answer 1

ANSWER

If a fixed amount is withdrawn on first day of every month of the calendar year, the interest on the total amount of drawings will be calculated for 6.5 months.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