What is the Banker's Discount on a bill of $500 due in 3 months at a rate of 6%

What is the Banker's Discount on a bill of $500 due in 3 months at a rate of 6% per annum?

What is the Banker's Discount on a bill of $500 due in 3 months at a rate of 6% per annum?

Correct Answer: $7.50

Step 1: Identify the principal amount, which is the total bill. In this case, it is $500.
Step 2: Identify the rate of interest. Here, it is 6% per annum.
Step 3: Identify the time period until the bill is due. It is 3 months.
Step 4: Convert the time period from months to years. Since there are 12 months in a year, 3 months is equal to 3/12 years.
Step 5: Use the Banker's Discount formula: Banker's Discount = (Principal x Rate x Time) / 100.
Step 6: Substitute the values into the formula: Banker's Discount = (500 x 6 x 3/12) / 100.
Step 7: Calculate the time part: 3/12 equals 0.25.
Step 8: Now calculate: Banker's Discount = (500 x 6 x 0.25) / 100.
Step 9: Multiply: 500 x 6 = 3000.
Step 10: Now multiply: 3000 x 0.25 = 750.
Step 11: Finally, divide by 100: 750 / 100 = 7.50.
Step 12: The Banker's Discount on the bill is $7.50.

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