🎴 Flashcard Mode
Bills of Exchange and Discount
Card1 / 26
Mastered0
Review0
QuestionClick to flip
On 1.3.2006 X draws a bill on Y for 3 months for Rs20,000. On 4.5.2006, Y pays the bill to X at 12% discount. The amount of discount will be __________.
AnswerClick to flip back
A
Rs. 200
💡 Explanation:
The discount is calculated on the face value of the bill for the period it is held before maturity. Here, the bill is for 20,000 at 12 percent per annum for 3 months: 20,000 * 0.12 * (3/12) = 600. However, the question asks for the discount on the amount paid on 4.5.2006, which is 1 month before maturity (due date is 4.6.2006). 20,000 * 0.12 * (1/12) = 200.