What is the true discount on a bill of Rs. 5000 due in 3 months if the Banker's

What is the true discount on a bill of Rs. 5000 due in 3 months if the Banker's Discount is Rs. 125?

What is the true discount on a bill of Rs. 5000 due in 3 months if the Banker's Discount is Rs. 125?

Correct Answer: Rs. 31.25

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).
Step 6: Calculate the True Discount. 125 * (1/4) = 31.25.
Step 7: Conclude that the True Discount on the bill is Rs. 31.25.

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