Multiple choice

If a fixed amount is withdrawn on the middle day of every month of a calendar year, the interest on total amount of drawings will be calculator for

  1. 4.5 months

  2. 5.5 months

  3. 6 months

  4. 6.5 months
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

When drawings are made on the 15th of every month, the first drawing is used for 11.5 months and the last for 0.5 months. The average period is (11.5 + 0.5) / 2 = 6 months. This is the standard formula for interest calculation on monthly drawings made mid-month.

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