A bill of Rs. 5000 is due in 2 months. What is the Banker's Discount at 10% per

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Question: A bill of Rs. 5000 is due in 2 months. What is the Banker\'s Discount at 10% per annum?

Options:

Correct Answer: Rs. 83.33

Solution:

Banker\'s Discount = (Face Value * Rate * Time) / 100 = (5000 * 10 * 2/12) = Rs. 83.33

A bill of Rs. 5000 is due in 2 months. What is the Banker's Discount at 10% per annum?

A bill of Rs. 5000 is due in 2 months. What is the Banker's Discount at 10% per annum?

Step 1: Identify the face value of the bill, which is Rs. 5000.
Step 2: Identify the rate of interest, which is 10% per annum.
Step 3: Identify the time period until the bill is due, which is 2 months.
Step 4: Convert the time period from months to years. Since there are 12 months in a year, 2 months is equal to 2/12 years.
Step 5: Use the formula for Banker's Discount: Banker's Discount = (Face Value * Rate * Time) / 100.
Step 6: Substitute the values into the formula: Banker's Discount = (5000 * 10 * (2/12)) / 100.
Step 7: Calculate the value: First, calculate (5000 * 10) = 50000. Then, calculate (50000 * (2/12)) = 50000 * 0.1667 = 8333.33.
Step 8: Finally, divide by 100 to get the Banker's Discount: 8333.33 / 100 = Rs. 83.33.

Banker's Discount – The Banker's Discount is the interest calculated on the face value of a bill for the time period until its maturity, using a specified rate.
Time Calculation – Understanding how to convert months into years for the purpose of calculating interest.
Percentage Calculation – Applying the percentage formula correctly to find the discount amount.