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Question
A bill of ₹ 6,395 drawn on 19th January 2015 for 8 months was discounted on 28th February 2015 at 8% p.a. interest. What is the banker’s discount? What is the cash value of the bill?
Solution
Given, Face Value of bill = ₹ 6,395
r = 8%
Date of drawing = 19th January, 2015
Period of bill = 8 months
Nominal due date = 19th September, 2015
Legal due date = 22nd September, 2015
Date of discounting = 28th 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.
Notes
The answer in the textbook is incorrect.
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