A bill of Rs. 10000 is due in 1 year. If the Banker's Discount is Rs. 800, what

A bill of Rs. 10000 is due in 1 year. If the Banker's Discount is Rs. 800, what is the rate of interest?

A bill of Rs. 10000 is due in 1 year. If the Banker's Discount is Rs. 800, what is the rate of interest?

Correct Answer: 8%

Step 1: Understand that the bill amount (Face Value) is Rs. 10000 and it is due in 1 year.
Step 2: Know that the Banker's Discount is Rs. 800.
Step 3: Use the formula for Banker's Discount: Banker's Discount = (Face Value * Rate * Time) / 100.
Step 4: Substitute the known values into the formula: 800 = (10000 * Rate * 1) / 100.
Step 5: Simplify the equation: 800 = (10000 * Rate) / 100.
Step 6: Multiply both sides by 100 to eliminate the denominator: 80000 = 10000 * Rate.
Step 7: Divide both sides by 10000 to solve for Rate: Rate = 80000 / 10000.
Step 8: Calculate the Rate: Rate = 8%.

Banker's Discount – The Banker's Discount is the interest deducted in advance on a bill of exchange, calculated on the face value.
Rate of Interest Calculation – Understanding how to derive the rate of interest from the Banker's Discount formula.
Time Value of Money – The concept that money available now is worth more than the same amount in the future due to its potential earning capacity.