Match List I with List II in context of average period for calculating interest on drawings.

Choose the correct answer from the options given below.

A-III, B-II, C-I, D-IV

The correct answer is option 4- A-III, B-II, C-I, D-IV.

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

When the amount is withdrawn at the first day of each month
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When the amount is withdrawn at the middle of each month
Average Period = (No. of months left after 1 drawings + No. of months left after last drawings)/2
                        = (11.5+0.5)/ 2
                        = 6 months

When the amount is withdrawn at the end of each month
Average Period = (No. of months left after 1 drawings + No. of months left after last drawings)/2
                         = (11+0)/ 2
                         = 5.5 months

When the amount is withdrawn at the first day of each quarter
Average Period = (No. of months left after 1 drawings + No. of months left after last drawings)/2
                        = (12+3)/ 2
                        = 7.5 months