32 CHAP

# 32 CHAP - 32 TRUE DISCOUNT IMPORTANT CONCEPTS Suppose a man...

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IMPORTANT CONCEPTS 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 SOLVED EXAMPLES Ex. 1. Find the present worth of Rs. 930 due 3 years hence at 8% per annum. Also find the discount. Sol.

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32 CHAP - 32 TRUE DISCOUNT IMPORTANT CONCEPTS Suppose a man...

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