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The banker's discount on a bill due 4 months hence at 15 % is Rs. 420. What is the true discount?

Correct Answer: Rs. 400

Explanation:

Given in the question,
Banker's Discount = 420
Time in years = 4 months = 4/12 years = 1/3 years
Rate of interest = 15 %
As we know the formula,
True Discount = Banker's Discount × 100 (100 + Time in years x Rate of interest )

True Discount = 420 × 100 (100 + 4/12 × 15) ( 12 Months = 1 Year)
= 420 × 100 (100 + 5) = 400


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