Important Facts On True Discount-Aptitude Questions And Answers

Posted by Ravan

29 Jan, 2012

Suppose a man has to pay Rs. 156 after 4 years and the rate of interest is 14% per annum. Clearly, Rs. 100 at 14% will amount to Rs. 156 in 4 years. So, the payment of Rs. 100 now will clear off the debt of Rs. 156 due 4 years hence. We say that: Sum due = Rs. 156 due 4 years hence; Present Worth (P.W.) = Rs. 100; True Discount (T.D.) = Rs. (156 - 100) = Rs. 56 (Sum due) - (P.W.). We define : T.D. = Interest on P.W. Amount = (P.W.) + (T.D.). Interest is reckoned on P.W. and true discount is reckoned on the amount.

IMPORTANT FORMULAE Let rate = R% per annum and Time = T years. Then,

1. P.W.=[100 x Amount /100 + (R x T) =100 x T.D./ RxT

2. T.D.=[(P.W.) x R x T /100] = [ Amount x RxT/100 + (R x T)]

3.(S.I.)*(T.D.) /(S.I.)-(T.D.)

4. (S.I.) - (T.D.) - S.I. on T.D.

5. When the sum is put at compound interest, then P.W. = Amount/[1 +R/100]^T

Suppose a man has to pay Rs. 156 after 4 years and the rate of interest is 14% per annum. Clearly, Rs. 100 at 14% will amount to Rs. 156 in 4 years. So, the payment of Rs. 100 now will clear off the debt of Rs. 156 due 4 years hence. We say that:

Sum due = Rs. 156 due 4 years hence;

Present Worth (P.W.) = Rs. 100;

True Discount (T.D.) = Rs. (156 - 100) = Rs. 56

(Sum due) - (P.W.).

We define : T.D. = Interest on P.W.

Amount = (P.W.) + (T.D.).

Interest is reckoned on P.W. and true discount is reckoned on the amount.

IMPORTANT FORMULAELet rate = R% per annum and Time = T years. Then,

1. P.W.=[100 x Amount /100 + (R x T)

=100 x T.D./ RxT

2. T.D.=[(P.W.) x R x T /100]

= [ Amount x RxT/100 + (R x T)]

3.(S.I.)*(T.D.) /(S.I.)-(T.D.)

4. (S.I.) - (T.D.) - S.I. on T.D.

5. When the sum is put at compound interest, then

P.W. = Amount/[1 +R/100]^T

Very Useful

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