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If the bankers' discount on a bill is Rs. 400 and the time is 4 months, what is

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Question: If the bankers\' discount on a bill is Rs. 400 and the time is 4 months, what is the face value of the bill at the rate of 12% per annum?

Options:

  1. Rs. 4000
  2. Rs. 5000
  3. Rs. 6000
  4. Rs. 7000

Correct Answer: Rs. 5000

Solution: 

Face Value = BD / (Rate × Time) = 400 / (12 × 4/12) = Rs. 5000.

If the bankers' discount on a bill is Rs. 400 and the time is 4 months, what is

Practice Questions

Q1
If the bankers' discount on a bill is Rs. 400 and the time is 4 months, what is the face value of the bill at the rate of 12% per annum?
  1. Rs. 4000
  2. Rs. 5000
  3. Rs. 6000
  4. Rs. 7000

Questions & Step-by-Step Solutions

If the bankers' discount on a bill is Rs. 400 and the time is 4 months, what is the face value of the bill at the rate of 12% per annum?
Correct Answer: Rs. 5000
  • Step 1: Understand that the bankers' discount (BD) is Rs. 400.
  • Step 2: Know that the time given is 4 months.
  • Step 3: Convert the time from months to years. Since there are 12 months in a year, 4 months is equal to 4/12 years.
  • Step 4: The rate of interest is given as 12% per annum. Convert this percentage to a decimal by dividing by 100, which gives 0.12.
  • Step 5: Use the formula for face value: Face Value = BD / (Rate × Time).
  • Step 6: Substitute the values into the formula: Face Value = 400 / (0.12 × (4/12)).
  • Step 7: Calculate the denominator: 0.12 × (4/12) = 0.12 × 0.3333 = 0.04.
  • Step 8: Now calculate the face value: Face Value = 400 / 0.04.
  • Step 9: Perform the division: 400 / 0.04 = 10000.
  • Step 10: Therefore, the face value of the bill is Rs. 10000.
  • Bankers' Discount – The bankers' discount is the interest on the face value of a bill for the time period until its maturity, calculated at a specified rate.
  • Face Value Calculation – The face value of a bill can be calculated using the formula: Face Value = BD / (Rate × Time), where BD is the bankers' discount.
  • Interest Rate Conversion – Understanding how to convert the annual interest rate into the appropriate time period for calculations.
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