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Question
How will you calculate interest on the drawings of equal amounts on the last day of every month of a calendar year?
Short Answer
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Solution
When equal amounts are withdrawn on the last day of every month during a calendar year, interest on drawings is calculated by the average period method.
In this case, the average period is taken as 5.5 months.
Interest on drawings = `"Total drawings" xx "Rate of interest" xx 5.5/12`
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