A bill of Rs. 12000 is due in 5 months. If the Banker's Discount is Rs. 200, wha

A bill of Rs. 12000 is due in 5 months. If the Banker's Discount is Rs. 200, what is the rate of interest?

A bill of Rs. 12000 is due in 5 months. If the Banker's Discount is Rs. 200, what is the rate of interest?

Step 1: Identify the given values. The bill amount (Face Value) is Rs. 12000, the Banker's Discount is Rs. 200, and the time until the bill is due is 5 months.
Step 2: Convert the time from months to years. Since the time is 5 months, we convert it to years by dividing by 12. So, 5 months = 5/12 years.
Step 3: Use the formula for the rate of interest. The formula is: Rate = (Banker's Discount * 100) / (Face Value * Time).
Step 4: Substitute the values into the formula. Rate = (200 * 100) / (12000 * (5/12)).
Step 5: Calculate the denominator. First, calculate 12000 * (5/12) = 5000.
Step 6: Now substitute back into the formula: Rate = (200 * 100) / 5000.
Step 7: Calculate the numerator: 200 * 100 = 20000.
Step 8: Now divide: Rate = 20000 / 5000 = 4.
Step 9: Convert the result into a percentage. Since we are looking for the rate, we express it as a percentage: Rate = 4%.
Step 10: Finalize the answer. The rate of interest is 4%.

Banker's Discount – The discount allowed by a bank on the face value of a bill, calculated based on the time until the bill's maturity.
Rate of Interest Calculation – The formula for calculating the rate of interest using the Banker's Discount, face value, and time period.
Time Conversion – Understanding the conversion of time from months to years when calculating interest rates.