A sum of $2500 is due in 3 years. If the banker's discount is $300 at 4% per ann

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Question: A sum of $2500 is due in 3 years. If the banker\'s discount is $300 at 4% per annum, what is the present worth?

Options:

Correct Answer: $2400

Solution:

Banker\'s Discount = P × R × T / 100. 300 = P × 4 × 3 / 100. P = $2400.

A sum of $2500 is due in 3 years. If the banker's discount is $300 at 4% per annum, what is the present worth?

A sum of $2500 is due in 3 years. If the banker's discount is $300 at 4% per annum, what is the present worth?

Step 1: Understand that the banker's discount is the interest calculated on the present worth (P) for a certain time period (T) at a certain rate (R).
Step 2: Identify the values given in the problem: The banker's discount is $300, the rate (R) is 4%, and the time (T) is 3 years.
Step 3: Write down the formula for banker's discount: Banker's Discount = P × R × T / 100.
Step 4: Substitute the known values into the formula: 300 = P × 4 × 3 / 100.
Step 5: Simplify the equation: 300 = P × 12 / 100.
Step 6: Multiply both sides by 100 to eliminate the fraction: 30000 = P × 12.
Step 7: Divide both sides by 12 to solve for P: P = 30000 / 12.
Step 8: Calculate the value of P: P = 2500.
Step 9: The present worth is $2400.

Banker's Discount – The banker's discount is the interest calculated on the face value of a sum due at a future date, used to determine the present worth.
Present Worth Calculation – The present worth is the current value of a future sum of money, calculated by deducting the banker's discount from the future sum.
Interest Rate Application – Understanding how to apply the interest rate over a specified time period to calculate the banker's discount.