Discussion
What is the banker’s discount on ₹1,650 due 4 years hence at 4% per annum?
Answer: B
Correct answer: ₹264
The banker’s discount is simply the simple interest on the face value for the unexpired time: \[ \text{BD} = \frac{A \times R \times T}{100} = \frac{1650 \times 4 \times 4}{100} = \frac{26400}{100} = 264. \] This is the one quantity in the topic that needs no adjustment for present worth, which is what makes it the easiest to compute and the easiest to confuse with the true discount. For comparison, the true discount here is \( \dfrac{1650 \times 16}{116} \approx 227.59 \), and the banker’s gain is the difference, about 36.41. The distractor 228 is that true discount rounded, placed to catch the confusion. The practical meaning is that a banker discounting a bill charges interest on its full face value for the time it has left to run, and so gains slightly more than the mathematically fair discount.
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