A loan of $6000 is taken for 3 years at a bankers discount of 15%. What is the t
Practice Questions
Q1
A loan of $6000 is taken for 3 years at a bankers discount of 15%. What is the total discount?
$2700
$270
$600
$900
Questions & Step-by-Step Solutions
A loan of $6000 is taken for 3 years at a bankers discount of 15%. What is the total discount?
Correct Answer: $2700
Step 1: Identify the loan amount, which is $6000.
Step 2: Identify the bankers discount rate, which is 15%.
Step 3: Identify the time period of the loan, which is 3 years.
Step 4: Use the formula for total discount: Total Discount = (Loan Amount × Discount Rate × Time) / 100.
Step 5: Plug in the values: Total Discount = (6000 × 15 × 3) / 100.
Step 6: Calculate the multiplication: 6000 × 15 = 90000.
Step 7: Multiply the result by the time: 90000 × 3 = 270000.
Step 8: Divide by 100 to find the total discount: 270000 / 100 = 2700.
Step 9: The total discount is $2700.
Bankers Discount – A method of calculating interest where the discount is taken on the principal amount for the entire loan period, rather than on the remaining balance.
Simple Interest Calculation – Understanding how to calculate interest or discount using the formula: Principal × Rate × Time.
