If the Banker's Discount on a sum of $8000 for 5 years at 8% per annum is calcul

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Question: If the Banker\'s Discount on a sum of $8000 for 5 years at 8% per annum is calculated, what is the discount?

Options:

Correct Answer: $2400

Solution:

Banker\'s Discount = 8000 × 8/100 × 5 = $3200.

If the Banker's Discount on a sum of $8000 for 5 years at 8% per annum is calculated, what is the discount?

If the Banker's Discount on a sum of $8000 for 5 years at 8% per annum is calculated, what is the discount?

Step 1: Identify the principal amount, which is $8000.
Step 2: Identify the rate of interest, which is 8%.
Step 3: Identify the time period, which is 5 years.
Step 4: Convert the percentage rate to a decimal by dividing by 100. So, 8% becomes 0.08.
Step 5: Calculate the interest for the entire period using the formula: Interest = Principal × Rate × Time.
Step 6: Substitute the values into the formula: Interest = 8000 × 0.08 × 5.
Step 7: Calculate the multiplication: 8000 × 0.08 = 640, then 640 × 5 = 3200.
Step 8: The result, $3200, is the Banker's Discount.

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