Download the Arithmetic Approximation Banker Discount MCQs with Free PDF for PPSC, FPSC, PMS, NTS, KPKPSC, and SPSC exam
The arithmetic approximation method of calculating banker's discount is a simplified method that is often used when the interest rate is low or the time period is short.
The formula for calculating banker's discount using the arithmetic approximation method is:
where:
- BD is the banker's discount
- P is the face value of the bill
- T is the time period in years
- R is the annual interest rate
For example, if the face value of a bill is $100, the time period is 6 months, and the annual interest rate is 10%, then the banker's discount using the arithmetic approximation method is:
BD = (100 * (0.5) * 10) / 2 = $25
The arithmetic approximation method is not as accurate as the exact method of calculating banker's discount, but it is much simpler and easier to use.
Here are some of the benefits of using the arithmetic approximation method of calculating banker's discount:
- It is simpler and easier to use than the exact method.
- It is accurate enough for most purposes when the interest rate is low or the time period is short.
- It can be used to make quick estimates of banker's discount.
However, there are also some limitations to the arithmetic approximation method:
- It is not as accurate as the exact method.
- It cannot be used when the interest rate is high or the time period is long.
Overall, the arithmetic approximation method is a useful tool for calculating banker's discount in cases where the interest rate is low or the time period is short. It is simpler and easier to use than the exact method, and it is accurate enough for most purposes.
To see more detail and more material visit www.superiorexam.pk .The MCQs are free to download, and they are a valuable resource for anyone who wants to learn more about competitive exam.
