A sum of money amounts to $1200 in 3 years at a certain rate of interest. If the

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Question: A sum of money amounts to $1200 in 3 years at a certain rate of interest. If the true discount is $300, what is the rate of interest?

Options:

Correct Answer: 6%

Solution:

Let the present worth be x. Then, x + 300 = 1200, so x = 900. True Discount = x * Rate * Time / 100. 300 = 900 * Rate * 3 / 100. Rate = 10%.

A sum of money amounts to $1200 in 3 years at a certain rate of interest. If the true discount is $300, what is the rate of interest?

A sum of money amounts to $1200 in 3 years at a certain rate of interest. If the true discount is $300, what is the rate of interest?

True Discount – The difference between the future value and the present worth, representing the interest that would have been earned over time.
Present Worth – The current value of a sum of money that will amount to a certain future value at a specific interest rate.
Rate of Interest – The percentage at which interest is calculated on the principal amount over a period of time.
Time Value of Money – The concept that money available now is worth more than the same amount in the future due to its potential earning capacity.