The Solution

If a company works out its requirement of working capital finance for the next twelve months i.e. Wi for i=1,2, …., 12, then the total interest burden for the company during the next twelve months works out to:
12 12
(3) I(x) = Σ x.(a/12) + Σ (Wi – x). θ(Wi – x). [(a+b)/12].
i=1 i=1
 
12
= a.x +[(a+b)/12] Σ (Wi – x). θ(Wi – x),
i=1