The correct answer is Option (4) - (A)-(IV), (B)-(III), (C)-(II), (D)-(I).
List - I (Equal amount of drawings made)
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List - II (Number of month for which interest calculated)
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(A) At the end of each half year
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(IV) 3 months
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(B) At the beginning of each quarter
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(III) 7.5 months
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(C) At the beginning of each month
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(II) 6.5 months
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(D) At the end of each quarter
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(I) 4.5 months
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Average period is calculated for calculating interest on drawings and the average period depends on the timing of withdrawal. The formula for calculating the average period is = (Months left after Ist drawing + Months left after last drawing) / 2
After calculating the average period interest on drawings is calculated. The formula for calculating interest on drawing is = Total drawings X Rate of interest/100 X Average period/12
The financial year = 1st April to 31st March
When the amount is withdrawn at the end of each half year. Ist drawing = 30 Sept, so months left after it are 6. Last drawing = 31 march, so months left after it are 0. Average Period = (No. of months left after 1 drawings + No. of months left after last drawings)/2 = (6 +0)/ 2 = 3 months
When the amount is withdrawn at the beginning of each quarter. Ist drawing = 1st April, so months left after it are 12. Last drawing = 1st Jan, so months left after it are 3. Average Period = (No. of months left after 1 drawings + No. of months left after last drawings)/2 = (12+3)/ 2 = 7.5 months
When the amount is withdrawn at the beginning of each month. Ist drawing = 1st April, so months left after it are 12. Last drawing = 1st March, so months left after it are 1. Average Period = (No. of months left after 1 drawings + No. of months left after last drawings)/2 = (12+1)/ 2 = 6.5 months
When the amount is withdrawn at the end of each quarter. Ist drawing = 30th June, so months left after it are 9. Last drawing = 31st March, so months left after it are 0. Average Period = (No. of months left after 1 drawings + No. of months left after last drawings)/2 = (9+0)/ 2 = 4.5 months |