If the Banker's Discount on a loan of $3000 is $90 for 3 months, what is the rat

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Question: If the Banker\'s Discount on a loan of $3000 is $90 for 3 months, what is the rate of interest?

Options:

Correct Answer: 6%

Solution:

Rate = (BD x 100) / (Principal x Time) = (90 x 100) / (3000 x 3/12) = 12%

If the Banker's Discount on a loan of $3000 is $90 for 3 months, what is the rate of interest?

If the Banker's Discount on a loan of $3000 is $90 for 3 months, what is the rate of interest?

Correct Answer: 12%

Step 1: Identify the given values. The Banker's Discount (BD) is $90, the Principal (loan amount) is $3000, and the Time is 3 months.
Step 2: Convert the time from months to years. Since the interest rate is usually calculated per year, we convert 3 months to years: 3 months = 3/12 years = 0.25 years.
Step 3: Use the formula for the rate of interest: Rate = (BD x 100) / (Principal x Time).
Step 4: Substitute the values into the formula: Rate = (90 x 100) / (3000 x 0.25).
Step 5: Calculate the denominator: 3000 x 0.25 = 750.
Step 6: Now calculate the rate: Rate = (90 x 100) / 750.
Step 7: Calculate the numerator: 90 x 100 = 9000.
Step 8: Now divide: Rate = 9000 / 750 = 12.
Step 9: The final result is 12%, which is the rate of interest.

Banker's Discount – The Banker's Discount is the interest deducted in advance on a loan, calculated based on the principal amount and the time period.
Rate of Interest Calculation – The formula for calculating the rate of interest using the Banker's Discount, principal, and time.
Time Conversion – Understanding the conversion of time from months to years when calculating interest.