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Bankers discount is calculated on the basis of face value, the formula of the banker discount is similar to the formula of simple interest in one perspective. However, in the other perspective, the formula quietly looks different from other formulas. More often the learners are frustrated by the concept of simple interest, true discount, and banker’s discount. They need to clarify their doubt about these terms in order to solve the problems of bankers’ discounts and true discounts. They also have to clarify the concept of terms regarding the problems of bankers’ discounts and gains.
Overview Banker’s Discount
Suppose a trader P buys the product of the value of rupees 1000 from another trader Q. The time of credit is endorsed by trader P for one year and at the rate of simple interest 10 per cent. In the mentioned case, the present value of the product is 909 rupees approx, the true discount is 91 rupees approx, bankers discount is equal to 100, and hence the bankers discount is equal to 9 rupees. In the above-mentioned example, 1000 is the face value for the calculation of banker’s discount; however this amount represents the sum due in the calculation of true discount. In addition to this, it can be easily seen from the above-mentioned problems and solution the rupees 1000 looks similar to the accrued amount in the problems of interest. Furthermore, it can be also seen that in case the present value is multiplied by the rate of simple interest in the percentage form then the learners can get the amount to subdue according to the problems related to true discount or face values regarding the problems of the banker’s discount. The learners can be flustered by the various facts in case they cannot understand the terms interest, simple interest, true discount, bankers discount and bankers gain.
Definition of Banker’s Discount
The contemporary learners and instructors focus on the formula instead of the definition to solve the problems. However, the definition of the banker’s discount plays a vital role in order to solve the problems related to banker’s gains or true discounts. Furthermore, the definition of banker discounts helps the learners to solve the regarding problems. The bankers discount can be defined as the term the simple interest. Bankers discount is the simple interest on the face value for a certain time in case the trader paid the amount to the lender. The bankers discount formula looks like the simple interest formula unless the term face value is not replaced by principal value.
Various formulas of Banker’s Discount
In order to solve the problems regarding banker’s discount, the learners and instructors use some formulas such as:
P = Q / (1 + N (M /100))
O = (QNM) / (100 + NM)
R = QNM / 100
S = R – O
Where P is the present value, Q is the face value, N is the time period, M is the rate of interest, O is the true discount, R is the banker’s discount, and S is the bankers gain.
The learners can use the mentioned formula to solve the problems regarding the banker’s discount, true discount and bankers gain. In order to solve these kinds of problems, the learners and practitioners have to understand the various terms that are generally used in such kinds of problems; otherwise, they cannot solve a simple question regarding the topics.
Discussion on Banker’s Discount problems
The students need to focus on the various terms that are used in such kinds of problems otherwise they cannot solve such kinds of problems in an effective way. The recent studies suggest that the learners are getting confused by the terms simple interest, true discount, and banker’s discount. In order to avoid confusion, they have to analyse all those problems that are related to simple interest, true discount, and banker discount. The problems related to the banker’s discount and gain cannot be effectively dealt with unless they know the concept of simple interest, true discount, and banker’s discount. In simple words, the banker’s discount can be found by a simple interest of face value and bankers’ gain can be found by subtraction of bankers discount from the true discount. However, in order to solve such kinds of problems in an effective way and quickly, the learners need to improve their calculations so that they can get an accurate and error-free result.
Conclusion
In order to solve the problems of the banker’s gain and banker’s discount, the learners have to understand the actual meaning of these terms otherwise they cannot solve such kinds of problems. However, an understanding of the true discount and simple interest is helpful in order to understand the concept of these two terms. The learners cannot solve such kind of problem unless they have a better understanding of true discount and simple interest.
