Select the conditions required for computing interest on drawings using average period method:
A. Equal amount of drawings
B. Fixed interval of drawings
C. Varying amounts of drawings
D. Different interval of drawings
E. Rate of Interest
Choose the correct answer from the options given below:
Select the conditions required for computing interest on drawings using average period method:
A. Equal amount of drawings
B. Fixed interval of drawings
C. Varying amounts of drawings
D. Different interval of drawings
E. Rate of Interest
Choose the correct answer from the options given below:
Solution
✅ Correct Option: 4
The average period method is applicable only when the drawings are of equal amount (A) made at regular or fixed intervals (B), and of course a rate of interest (E) is needed. Varying amounts or irregular intervals require the product method instead.
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