A bill of Rs. 25000 is discounted at 5% per annum for 3 months. What is the bank

A bill of Rs. 25000 is discounted at 5% per annum for 3 months. What is the bankers' discount?

A bill of Rs. 25000 is discounted at 5% per annum for 3 months. What is the bankers' discount?

Correct Answer: Rs. 312.5

Step 1: Identify the total bill amount, which is Rs. 25000.
Step 2: Identify the discount rate, which is 5% per annum.
Step 3: Convert the time period from months to years. Since we have 3 months, we convert it to years: 3 months = 3/12 = 0.25 years.
Step 4: Use the formula for Bankers' Discount: Bankers' Discount = (Bill Amount × Discount Rate × Time Period) / 100.
Step 5: Substitute the values into the formula: Bankers' Discount = (25000 × 5 × 0.25) / 100.
Step 6: Calculate the result: 25000 × 5 = 125000, then 125000 × 0.25 = 31250, and finally 31250 / 100 = 312.5.
Step 7: The Bankers' Discount is Rs. 312.5.

Bankers' Discount – The bankers' discount is the interest on the face value of a bill for the time period until its maturity, calculated using the formula: BD = (Face Value × Rate × Time) / 100.