### Discussion :: Banker's Discount - General Questions (Q.No.6)

Sairam said: (Oct 27, 2011) | |

Can some one explain how this formula for sum has came? Thanks in advance. :). |

Aashish said: (Dec 26, 2011) | |

What is banker's discount and true discount? |

Jatinder said: (Mar 8, 2012) | |

I also want to learn this formula how it can be formulated. |

Sanjoy said: (Oct 9, 2012) | |

Can some one explain how this formula for sum has came? |

Ramratna said: (Sep 6, 2013) | |

How does this formula come? |

Cherishy said: (Dec 11, 2013) | |

The banker deducts the simple interest on the face value for the unexpired time. This deduction is known as Bankers Discount (BD). The present value is the amount which, if placed at a particular rate for a specified period will amount to that sum of money at the end of the specified period. The interest on the present value is called the True Discount (TD). P=present value; S=sum;. (P*R*T)/100 + P = S i.e. TD+P=S......(1). P*R*T/100=TD and S*R*T/100=BD; Therefore P= S*TD/BD......(2). Solving 1 and 2 we get the result. |

Sukumar Satyen said: (Apr 30, 2015) | |

Following is explanation: Banker's Discount (BD) is simple interest on Face Value of Bill (F). Given that, BD = Rs. 72, Time (T) = T year, Interest Rate (R) = R. We know, BD = F*T*R/100 = 72. => 72*100/F = T*R........Equation (1). True Discount (TD) is simple interest on Present Worth (PW). We know, TD = PW*T*R/100 = 60. => 60*100/PW = T*R..........Equation (2). From equation (1) & (2), => 72*100/F = 60*100/PW. => 72*100/60*100 = F/PW. => 6/5 = F/[F/{1+(T*R/100)}]. We know, PW = F/{1+(T*R/100)}. => 6/5 = 1+(T*R/100). => (6/5)-1 = (T*R/100). => (1/5) = (T*R/100). => (1/5)*100 = T*R...........Equation (3). From Equation (1) & (3), => (1/5)*100 = 72*100/F. => F = 72*100/(100/5). => F = 72*5 = Rs. 360. Thanks. |

Sneha said: (Dec 18, 2016) | |

Can you plzz explain the problem along with sum? |

Gadisa said: (Jan 17, 2019) | |

Please explain the present worth and principal, what is the difference between it? |

Sadati Bin Abdu said: (Jul 14, 2019) | |

Thanks a lot @Cherishy and @Sukumar. |

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