Question

A bill of ₹ 5,475 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 = ₹ 5,475

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

∴ Number of days from date of discounting to legal due date is as follows:

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

Period = `206/365`

Banker’s discount = Interest on F.V. ₹ 5,475 for 206 days at 8% p.a.

∴ Banker’s discount = `("FV"xx"n"xx"r")/100`

∴ Banker’s discount = `5,475xx 206/365xx8/100`

∴ Banker’s discount = ₹ 247.20

Cash value = Face Value – Banker’s discount

= 5,475 – 247.20

= 5,227.80

∴ The cash value of the bill is ₹ 5,227.80.