Paper 4: Fundamentals of Business Mathematics & Statistic

1.22 I FUNDAMENTALS OF BUSINESS MATHEMATICS AND STATISTICS

Arithmetic

1.3.1 BILL OF EXCHANGE :

This is a written undertaking (or document) by the debtor to a creditor for paying certain sum of money on

a specified future date.

A bill thus contains (i) the drawer (ii) the drawee (iii) the payee. A specimen of bill is as follows

Stamp Address of drawer

Date......

Six months after date pay to M/s. E.P.C. or order the sum of ` 1000 (rupees one thousand only) for the

value received.

C.K. Basu

1/1 S.K. Dhar Rd.

Kolkata – 700 017 A. B. Chakraborty

(drawer)

Bill of Exchange is two kinds

(i) Bill of exchange after date, in which the date of maturity is counted from the date of drawing the bill.

(ii) Bill of exchange after sight, in which the date of maturity is counted from the date of accepting the

bill.

The date on which a bill becomes due is called nominal due date. If now three days, added with this

nominal due date, the bill becomes legally due. Thus three days are known as days of grace.

Banker’s Discount (B.D.) & Banker’s Gain (B.G.):

Banker’s discount (B.D.) is the interest on B.V. and difference between B.D. and T.D. is B.G.

i.e. B.D. = int. on B.V. = Ani .........(v)

B.G. = B.D. – T.D. and B.G. = interest on T.D.

A(ni)^2

B.G.= 1 ni+ ..............(vi)

B.V. – B.D. = Discounted value of the bill......(vii)

SOLVED EXAMPLES :

Example 40 : A bill for ` 1224 is due in 6 months. Find the difference between true discount and banker’s

discount, the rate of interest being 4% p.a.

1224 1 (0.04)

T.D Ani^2 24.48 24.

1 ni 1 1 (0.04) 1.02

2

× ×

= + = = =

+ × B.D. = Ani = 1224 x

1

2 x (0.04) = 24.48;

B.D. – T.D. = 24.48 – 24= 0.08; ∴ required difference = ` 0.48 [ This difference is B.G. (0.48)

Again Int. on 24 (i.e., T.D.) =24. .(0.04) 0.48,^12 = i.e, B.G. = Int. on T.D.]