Multiple choice

On 1st April, A draws a bill of 3 months on B for Rs. 5,000 for mutual accommodation. The bill was discounted with bank on 4th May at 24% p.a. discount. A sends 1/5th of the proceeds to B. Calculate the amount sent by A to B.

  1. Rs. 940

  2. Rs. 1,000

  3. Rs. 960

  4. Rs. 3,840
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Discounting charges of bill = 5,000*24%2/12 = Rs. 200 Thus amount received from bank = Rs. 4, 800 Sent to B = Rs. 4800*1/5 = Rs. 960 If the bill had been discounted on 4th April, with discount charges Rs. 300 and amount sent would be 1/5(5000-300) i.e. Rs. 940. 1/5th of the face value of bill amounts to Rs. 1, 000. The amount retained by A is 4,800-960 = Rs. 3840

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