If the Banker's Discount on a sum of $5000 for 1 year at 12% per annum is calcul

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Question: If the Banker\'s Discount on a sum of $5000 for 1 year at 12% per annum is calculated, what is the amount?

Options:

Correct Answer: $600

Solution:

Banker\'s Discount = 5000 x 12/100 x 1 = $600.

If the Banker's Discount on a sum of $5000 for 1 year at 12% per annum is calculated, what is the amount?

If the Banker's Discount on a sum of $5000 for 1 year at 12% 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 12%.
Step 3: Identify the time period, which is 1 year.
Step 4: Convert the percentage rate to a decimal by dividing by 100. So, 12% becomes 0.12.
Step 5: Calculate the Banker's Discount using the formula: Banker's Discount = Principal x Rate x Time.
Step 6: Substitute the values into the formula: Banker's Discount = 5000 x 0.12 x 1.
Step 7: Perform the multiplication: 5000 x 0.12 = 600.
Step 8: Since the time is 1 year, the Banker's Discount is $600.

Banker's Discount – The Banker's Discount is the interest on the face value of a loan calculated for the time period until maturity, typically used in the context of promissory notes.
Simple Interest Calculation – The formula for calculating simple interest is I = P * r * t, where I is the interest, P is the principal amount, r is the rate of interest, and t is the time in years.