Step 1: Understand the terms. The 'Banker's Discount' is the interest amount calculated on the face value of the bill for the time period until it is due.
Step 2: Identify the given values. The Banker's Discount is Rs. 125 and the time until the bill is due is 3 months.
Step 3: Convert the time from months to years. Since there are 12 months in a year, 3 months is equal to 3/12 years.
Step 4: Use the formula for True Discount. The formula is: True Discount = Banker's Discount * (Time / (Time + 1)).
Step 5: Substitute the values into the formula. True Discount = 125 * (3/12) = 125 * (1/4).
