Question: A sum of money is due in 2 years. If the rate of interest is 10% per annum, what is the Banker\'s Discount on a sum of $1000?
Options:
$100
$200
$150
$50
Correct Answer: $100
Solution:
Banker\'s Discount = Principal × Rate × Time = 1000 × 10/100 × 2 = $200.
A sum of money is due in 2 years. If the rate of interest is 10% per annum, what
Practice Questions
Q1
A sum of money is due in 2 years. If the rate of interest is 10% per annum, what is the Banker's Discount on a sum of $1000?
$100
$200
$150
$50
Questions & Step-by-Step Solutions
A sum of money is due in 2 years. If the rate of interest is 10% per annum, what is the Banker's Discount on a sum of $1000?
Step 1: Identify the principal amount, which is the sum of money due. In this case, it is $1000.
Step 2: Identify the rate of interest per annum. Here, it is 10%.
Step 3: Identify the time period in years until the money is due. In this case, it is 2 years.
Step 4: Convert the interest rate from percentage to decimal by dividing by 100. So, 10% becomes 0.10.
Step 5: Use the formula for Banker's Discount: Banker's Discount = Principal × Rate × Time.
Step 6: Substitute the values into the formula: Banker's Discount = 1000 × 0.10 × 2.
Step 7: Calculate the result: 1000 × 0.10 = 100, then 100 × 2 = 200.
Step 8: Conclude that the Banker's Discount on a sum of $1000 is $200.
Banker's Discount – The Banker's Discount is the interest calculated on the face value of a sum due at a future date, typically used in the context of loans and financial instruments.
Simple Interest Calculation – Understanding how to calculate simple interest using the formula: Interest = Principal × Rate × Time.
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