A bill for Rs 7,650 was drawn on 8th March 2013, at 7 months. It was discounted on 18th May 2013 and the holder of the bill received Rs 7,497. What is the rate of interest charged by the bank?

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#### Solution

Bill has drawn on: 08.03.2013

Tenure: 7 month

Nominal due date: 08.10.2013

Legally due date: 11.10.2013

Discounted on: 08.05.2013

Unexpired Number of days

May | 13 |

June | 30 |

July | 31 |

Aug | 31 |

Sep | 30 |

Oct | 11 |

146 days |

`n = 146/365 yr = 2/5 yrs`

B.D = Face Value - Amount realised

= 7650 - 7497

= 153

B.D = A x n x i

`153 = 7650 xx 2/5 xx i`

`i = (153 xx 5)/(7650 xx 2) = 765/15300 = 1/20 = 0.05`

Hence, the required rate of interest is 5% per annum

Concept: Application of Calculus in Commerce and Economics in the Profit Function and Breakeven Point

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