Question

A bill of ₹ 6,395 drawn on 19^th January 2015 for 8 months was discounted on 28^th February 2015 at 8% p.a. interest. What is the banker’s discount? What is the cash value of the bill?

Answer 1

Given, Face Value of bill = ₹ 6,395

r = 8%

Date of drawing = 19^th January, 2015

Period of bill = 8 months

Nominal due date = 19^th September, 2015

Legal due date = 22^nd September, 2015

Date of discounting = 28^th February, 2015

∴ Number of days from date of discounting to legal due date

Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Total
0	31	30	31	30	31	31	22	206

Period = `206/365`

Banker’s discount = Interest on F.V. ₹ 6,395 for 206 days at 8% p.a.

∴ Banker’s discount = `(6,395 xx 206 xx 8)/(365 xx 100)`

∴ Banker’s discount = = 288.74

Cash value = Face Value – Banker’s discount

= 6,395 - 288.74 = 6,106.26

∴ Banker’s discount is ₹ 288.74 and Cash value of the bill is ₹ 6,106.26.