Calculate the Banker's Discount on a loan of $1200 for 6 months at an interest r

Calculate the Banker's Discount on a loan of $1200 for 6 months at an interest rate of 5%.

Calculate the Banker's Discount on a loan of $1200 for 6 months at an interest rate of 5%.

Correct Answer: $30.00

Step 1: Identify the loan amount, which is $1200.
Step 2: Identify the interest rate, which is 5%.
Step 3: Identify the time period for the loan, which is 6 months.
Step 4: Convert the time period from months to years. Since 6 months is half a year, it is 6/12 = 0.5 years.
Step 5: Use the formula for Banker's Discount: Banker's Discount = (Loan Amount x Interest Rate x Time) / 100.
Step 6: Substitute the values into the formula: Banker's Discount = (1200 x 5 x 0.5) / 100.
Step 7: Calculate the multiplication: 1200 x 5 = 6000, then 6000 x 0.5 = 3000.
Step 8: Divide by 100 to find the Banker's Discount: 3000 / 100 = 30.
Step 9: The Banker's Discount is $30.00.

Banker's Discount – The Banker's Discount is the interest calculated on the face value of a loan for the period until maturity, rather than on the amount actually received by the borrower.
Interest Calculation – Understanding how to calculate simple interest using the formula: Interest = Principal x Rate x Time.