If the Banker's Discount on a loan of $3000 is $90 for 3 months, what is the rate of interest?
Practice Questions
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Q1
If the Banker's Discount on a loan of $3000 is $90 for 3 months, what is the rate of interest?
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9%
Rate = (BD x 100) / (Principal x Time) = (90 x 100) / (3000 x 3/12) = 12%
Questions & Step-by-step Solutions
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Q
Q: If the Banker's Discount on a loan of $3000 is $90 for 3 months, what is the rate of interest?
Solution: Rate = (BD x 100) / (Principal x Time) = (90 x 100) / (3000 x 3/12) = 12%
Steps: 9
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.
