A sum of $4000 is borrowed for 3 years at a Banker's Discount of 9%. What is the

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Question: A sum of $4000 is borrowed for 3 years at a Banker\'s Discount of 9%. What is the total discount?

Options:

Correct Answer: $1080

Solution:

Banker\'s Discount = 4000 x 9/100 x 3 = $1080.

A sum of $4000 is borrowed for 3 years at a Banker's Discount of 9%. What is the total discount?

A sum of $4000 is borrowed for 3 years at a Banker's Discount of 9%. What is the total discount?

Step 1: Identify the total amount borrowed, which is $4000.
Step 2: Identify the Banker's Discount rate, which is 9%.
Step 3: Identify the time period for which the money is borrowed, which is 3 years.
Step 4: Calculate the discount for one year by multiplying the borrowed amount by the discount rate: 4000 x 9/100.
Step 5: Calculate the discount for 3 years by multiplying the one-year discount by 3: (4000 x 9/100) x 3.
Step 6: Perform the calculation: 4000 x 0.09 = 360, then 360 x 3 = 1080.
Step 7: The total discount is $1080.

Banker's Discount – Banker's Discount is calculated on the principal amount for the entire duration of the loan, not on the amount after discount.
Simple Interest Calculation – Understanding how to calculate interest over a period of time using the formula: Principal x Rate x Time.