A bill of Rs. 12000 is due in 9 months. Calculate the Banker's Discount at the r

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Question: A bill of Rs. 12000 is due in 9 months. Calculate the Banker\'s Discount at the rate of 15% per annum.

Options:

Correct Answer: Rs. 600

Solution:

Banker\'s Discount = (12000 × 15 × 0.75) / 100 = Rs. 1350.

A bill of Rs. 12000 is due in 9 months. Calculate the Banker's Discount at the rate of 15% per annum.

A bill of Rs. 12000 is due in 9 months. Calculate the Banker's Discount at the rate of 15% per annum.

Correct Answer: Rs. 1350

Step 1: Identify the total bill amount, which is Rs. 12000.
Step 2: Identify the rate of interest, which is 15% per annum.
Step 3: Identify the time period for which the bill is due, which is 9 months.
Step 4: Convert the time period from months to years. Since there are 12 months in a year, 9 months is equal to 9/12 = 0.75 years.
Step 5: Use the formula for Banker's Discount: Banker's Discount = (Bill Amount × Rate × Time) / 100.
Step 6: Substitute the values into the formula: Banker's Discount = (12000 × 15 × 0.75) / 100.
Step 7: Calculate the result: 12000 × 15 = 180000, then 180000 × 0.75 = 135000, and finally 135000 / 100 = 1350.
Step 8: The Banker's Discount is Rs. 1350.

Banker's Discount – Banker's Discount is the interest on the face value of a bill calculated for the time period until its maturity.
Time Value of Money – Understanding how interest rates apply over time, particularly in relation to the maturity of financial instruments.