Interest

Since Radha withdrew a fixed amount at the beginning of every quarter, the time periods for charging interest will vary for each quarter.
Let’s calculate average period for each withdrawal:
- 1st April: time till 31st March = 12 months
- 1st July: 9 months
- 1st October: 6 months
- 1st January: 3 months
Now, compute average time:
⇒ (12 + 9 + 6 + 3) ÷ 4 = 30 ÷ 4 = 7.5 months
But, this is only applicable for beginning of each quarter. However, average period is calculated differently under simple interest formula. For beginning of each quarter:
⇒ Average period = 7.5 months
Correction: Wait, this is correct only for yearly calculation. But in accounting conventions, for equal withdrawals at beginning of each quarter, average period = 4.5 months
Hence, interest is charged on total drawings for 4.5 months at annual rate.
⇒ Final answer: 4.5 months