Bankers Discount


Formulae: 

i. Suppose a merchant A buys goods worth Rs.10000 from another    
merchant B at a credit of say 5 months

ii.Then,B prepares a bill , called the bill of exchange 

iii. A signs this bill & allows B to withdraw the amount from his
bank account after exactly 5 months,the date exactly after 
5 months is called Nominally due date

iv. Three days (grace days) are added to it get a date known as
legally due date

v.Suppose B wants to have money before legally due date then he 
can have the money from banker or a broker who deducts S.I on the 
face value (i.e., 10000) for the period from the date on which 
the bill was discounted (i.e paied by the banker) & the legally 
due date this amount is known as Bankers Discount

vi.Thus , B.D is the S.I on the face for the period from the date 
on which the bill was discounted and the legally due date

vii.Bankers Gain (B.G) = (B.D) – (T.D) for the unexpired time

Note:
When the date of the bill is not given,grace days are not to be added

Formulae:

(1)B.D = S.I on bill for unexpired time
(2)B.G = (B.D) – (T.D) = S.I on T.D = (T.D)^2 /P.W
(3)T.D = sqrt(P.W * B.G)
(4)B.D = (Amount * Rate * Time)/100
(5)T.D = (Amount * Rate * Time)/(100+(Rate * time)
(6)Amount = (B.D * T.D)/(B.D – T.D)
(7)T.D = (B.G * 100)/(Rate * Time) 
                                                   Top
Simple Problems

1.If the true discount on a certain sum due 6 months hence at
15% is Rs 120.What is the bankers discount on the same for same
time and the same rate.

Sol:-            B.G = S.I on T.D
                     = RS (120 * 15 * ½  * 1/100)
                     = 9
     (B.D) – (T.D) = 9
                B.D = 120 + 9 =129

2.The bankers discount on Rs 1800 at 12 % per annum is equal to the
true discount on Rs 1872 for the same time at the same rate .Find 
the time.

Sol:-                S.I on Rs 1800 = T.D on Rs 1872
                           P.W of Rs 1872 is Rs 1800
                          Rs 72 is S.I on Rs 1800 at 12%
                           Time = (100 * 72)/(12 * 1800)
                                    = 1/3 years = 4 months

3.The bankers discount and true discount on a sum of money due 8 months
    hence are Rs.120 & Rs.110 resp. Find the sum  & the rate per cent

Sol:-                      Sum = (B.D * T.D) / (B.D) – (T.D)
                                      = (120 * 110) / (120 – 110)
                                      = 1320
      Since B.D is S.I on sum due, so S.I on Rs 1320 for 8 months is 
         Rs 120
                            Rate = (100 * 120) / (1320 * 2/3)
                                     = 13  7/11%
Medium Problems

1.The Bankers discount on Rs 1650 due a certain time hence is Rs 165.
find the true discount and the bankers gain.

Sol :-                 Sum = (B.D * T.D) / (B.D – T.D)
                                  = (B.D * T.D) / B.G
                    T.D/B.G = Sum/B.D =650/165 =10/1
                 Thus if B.G is Rs 1 ,T.D = Rs 10
                       if B.D is Rs 11 ,T.D = Rs 10
                       if B.D is Rs 165,T.D = Rs (10/11 * 165) = 150
                             B.G =Rs(165 – 150) = Rs 15
2.The Present worth of a bill due something hence is Rs 1110 and the
true discount on the bill is Rs.110 . Find the bankes discount & the 
bankers gain.

Sol:-               T.D = sqrt (P.W * B.G)
                       B.G = (T.D)^2 /P.W
                           = (110 * 110) / 1110
                           = 11
                       B.D = (T.D + B.G)
                           =  (110 + 11)
                           = Rs 121

3.What rate percent does a man get for his money when in discounting

Sol:-      Let the amount of the bill =100
                      Money deducted = 10
   Money received by the holder of the bill = (100 – 10)
                                            = 90
                  S.I on Rs 90 for 10 months = 10
                              Rate = (100 * 10) / (90 * 10/12)
                                   = 13 1/3%
                                                   Top
Complex Problems

1.A bill for Rs.6000 is drawn on July 14 at 5 months . It is 
discounted on 5th October at 10%.Find the bankers discount 
true discount, bankers gain and the money that the holder of
the  bill receives.

Sol:-                     
Face value of the bill = Rs.6000
date on which the bill was drawn = July 14 at 5 months
                      nominally due date = December 14
                      legally due date = December 17
          Date on which the bill was discounted = October 5     
       Unexpired time : Oct     Nov     Dec
                        26 +  30   +   17   =  73days =1/5 years
                    B.D = S.I on Rs 6000 for 1/5 year
                           = Rs (6000 * 10 * 1/5 * 1/100) = Rs 120
                    T.D = Rs(6000 * 10 *1/5)/(100 + (10 * 1/5))
                        = Rs. 117.64
                     B.G = (B.D) – (T.D)
                         = Rs(120 -117.64)
                         = Rs 2.36
           Money received by the holder of the bill
                         = Rs(6000 – 120) = 5880

			 
2. The bankers gain on a certain sum due  1 ½ year hence 
is 3/25 of the bankers discount .The rate percent is

Sol:-        Let B.D = 1 then B.G = 3/25         
                    T.D = (B.D – B.G)
                       = (1 – 3/25)
                       = 22/25
           sum = (1 * 22/25) / (1 – 22/25)
               = 22/3
           S.I on Rs 22/3 for 1 ½ year is 1.
                        Rate = (100 * 1) / (22/3 * 3/2)
                            = 9 1/9%

3. The bankers gain of a certain sum due 2 years hence 
at 10% per annum is Rs 24 .The percent worth is

Sol:-          
                         T.D = (B.G * 100) / (Rate * Time)
                           00) / (10 * 2)
                             = 120.
                        P.W = (100 *T.D) / (Rate * Time)
                            = (100 * 120) /(10 * 2)
                            = 600




    

Back                                          Top
Back To Main

Contact: 040-23000700