A bill of Rs. 4000 is due in 2 months. What is the Banker's Discount at the rate

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Question: A bill of Rs. 4000 is due in 2 months. What is the Banker\'s Discount at the rate of 5% per annum?

Options:

Correct Answer: Rs. 33.33

Solution:

Banker\'s Discount = (4000 * 5 * 2/12) / 100 = Rs. 33.33.

A bill of Rs. 4000 is due in 2 months. What is the Banker's Discount at the rate of 5% per annum?

A bill of Rs. 4000 is due in 2 months. What is the Banker's Discount at the rate of 5% per annum?

Correct Answer: Rs. 33.33

Step 1: Identify the total amount of the bill, which is Rs. 4000.
Step 2: Identify the rate of interest, which is 5% per annum.
Step 3: Identify the time period until the bill is due, which is 2 months.
Step 4: Convert the time period from months to years. Since there are 12 months in a year, 2 months is equal to 2/12 years.
Step 5: Calculate the Banker's Discount using the formula: Banker's Discount = (Principal Amount * Rate * Time) / 100.
Step 6: Substitute the values into the formula: Banker's Discount = (4000 * 5 * (2/12)) / 100.
Step 7: Simplify the calculation: First, calculate (2/12) which equals 1/6.
Step 8: Now calculate: Banker's Discount = (4000 * 5 * (1/6)) / 100.
Step 9: Calculate 4000 * 5 = 20000.
Step 10: Now divide 20000 by 6 to get approximately 3333.33.
Step 11: Finally, divide 3333.33 by 100 to get Rs. 33.33.

Banker's Discount – The Banker's Discount is the interest calculated on the face value of a bill for the time period until its maturity.
Time Value of Money – Understanding how interest rates affect the present value of future cash flows.