If the amount is withdrawn at the end of each quarter, the interest is calculated on the total money withdrawn during the year, for a period of _______?

When equal amounts are withdrawn at the end of each quarter, we need to find the average period for which the total drawings remain outside the business during the year.

Let's trace when each withdrawal is made and for how long it stays out:

• 1st Quarter end (after 3 months) → withdrawn amount remains out for 9 months
• 2nd Quarter end (after 6 months) → withdrawn amount remains out for 6 months
• 3rd Quarter end (after 9 months) → withdrawn amount remains out for 3 months
• 4th Quarter end (after 12 months) → withdrawn amount remains out for 0 months

Average period = $\frac{9 + 6 + 3 + 0}{4} = \frac{18}{4}$ = 4.5 months

Alternatively, using the direct formula for drawings at the end of each time period:

Average period = $\frac{\text{Total months in year} - \text{Months in one period}}{2}$

Average period = $\frac{12 - 3}{2} = \frac{9}{2}$ = 4.5 months

Therefore, interest on total drawings is calculated for 4.5 months.