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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