If the Banker's Discount on a sum of $5000 for 3 years at 8% per annum is calcul

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Question: If the Banker\'s Discount on a sum of $5000 for 3 years at 8% per annum is calculated, what is the amount?

Options:

Correct Answer: $1500

Solution:

Banker\'s Discount = 5000 × 8/100 × 3 = $1200.

If the Banker's Discount on a sum of $5000 for 3 years at 8% per annum is calculated, what is the amount?

If the Banker's Discount on a sum of $5000 for 3 years at 8% per annum is calculated, what is the amount?

Step 1: Identify the principal amount, which is $5000.
Step 2: Identify the rate of interest, which is 8% per annum.
Step 3: Identify the time period, which is 3 years.
Step 4: Convert the percentage rate to a decimal by dividing by 100. So, 8% becomes 0.08.
Step 5: Calculate the Banker's Discount using the formula: Banker's Discount = Principal × Rate × Time.
Step 6: Substitute the values into the formula: Banker's Discount = 5000 × 0.08 × 3.
Step 7: Perform the multiplication: 5000 × 0.08 = 400, then 400 × 3 = 1200.
Step 8: Conclude that the Banker's Discount is $1200.

Banker's Discount – The Banker's Discount is the interest calculated on the face value of a sum for a specific period, typically used in financial contexts to determine the discount on a loan or investment.