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A sum of money amounts to $1500 after 2 years at a certain rate of interest. If

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Question: A sum of money amounts to $1500 after 2 years at a certain rate of interest. If the true discount is $300, what is the present worth?

Options:

  1. $1200
  2. $1300
  3. $1400
  4. $1500

Correct Answer: $1200

Solution: 

Present Worth = Amount - True Discount. Therefore, Present Worth = 1500 - 300 = $1200.

A sum of money amounts to $1500 after 2 years at a certain rate of interest. If

Practice Questions

Q1
A sum of money amounts to $1500 after 2 years at a certain rate of interest. If the true discount is $300, what is the present worth?
  1. $1200
  2. $1300
  3. $1400
  4. $1500

Questions & Step-by-Step Solutions

A sum of money amounts to $1500 after 2 years at a certain rate of interest. If the true discount is $300, what is the present worth?
  • Step 1: Identify the total amount after 2 years, which is $1500.
  • Step 2: Identify the true discount, which is $300.
  • Step 3: Use the formula for Present Worth: Present Worth = Amount - True Discount.
  • Step 4: Substitute the values into the formula: Present Worth = 1500 - 300.
  • Step 5: Calculate the Present Worth: 1500 - 300 = 1200.
  • Present Worth Calculation – Understanding how to calculate present worth using the amount and true discount.
  • True Discount – Knowledge of what true discount means in the context of interest and present value.
  • Interest and Time Relationship – Recognizing the relationship between time, interest, and the amount in financial calculations.
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