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If the bankers discount on a sum of $8000 for 1 year at 12% is $960, what is the

Practice Questions

Q1
If the bankers discount on a sum of $8000 for 1 year at 12% is $960, what is the present value?
  1. $7040
  2. $7048
  3. $7200
  4. $7208

Questions & Step-by-Step Solutions

If the bankers discount on a sum of $8000 for 1 year at 12% is $960, what is the present value?
Correct Answer: 7040
  • Step 1: Identify the total amount (Principal) which is $8000.
  • Step 2: Identify the Bankers Discount which is $960.
  • Step 3: Use the formula for Present Value: Present Value = Principal - Bankers Discount.
  • Step 4: Substitute the values into the formula: Present Value = 8000 - 960.
  • Step 5: Calculate the result: 8000 - 960 = 7040.
  • Step 6: The Present Value is $7040.
  • Bankers Discount – The bankers discount is the interest deducted in advance on a loan or investment, calculated on the face value.
  • Present Value – Present value is the current worth of a sum of money that is to be received in the future, discounted at a specific interest rate.
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