A bill of Rs. 20,000 due after 6 months is discounted at a simple bank discount rate of 10% per annum. What is the discount amount?
Correct answer: C. Rs. 1,000
- A. Rs. 500
- B. Rs. 800
- C. Rs. 1,000
- D. Rs. 1,100
Explanation
Bank discount is calculated on the maturity value, using D = Mdt. Hence, D = 20,000 × 0.10 × 0.5 = Rs. 1,000. The proceeds would therefore be Rs. 19,000.
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