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If the true discount on a sum is $250 and the rate of interest is 12% per annum

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Question: If the true discount on a sum is $250 and the rate of interest is 12% per annum for 3 years, what is the present worth?

Options:

  1. $2000
  2. $2200
  3. $2400
  4. $2600

Correct Answer: $2000

Solution: 

Let Present Worth = x. 250 = x * 12 * 3 / 100. Solving gives x = $2000.

If the true discount on a sum is $250 and the rate of interest is 12% per annum

Practice Questions

Q1
If the true discount on a sum is $250 and the rate of interest is 12% per annum for 3 years, what is the present worth?
  1. $2000
  2. $2200
  3. $2400
  4. $2600

Questions & Step-by-Step Solutions

If the true discount on a sum is $250 and the rate of interest is 12% per annum for 3 years, what is the present worth?
  • True Discount – True discount is the difference between the future value and the present worth, calculated based on the interest rate and time period.
  • Present Worth Calculation – Present worth is the current value of a future sum of money, discounted at a specific interest rate over a certain period.
  • Interest Rate Application – Understanding how to apply the interest rate in the context of calculating present worth and true discount.
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