If the true discount on a sum of money is $100 at 8% per annum for 1 year, what

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Question: If the true discount on a sum of money is $100 at 8% per annum for 1 year, what is the sum?

Options:

Correct Answer: $1300

Solution:

Let the sum be x. True Discount = x * 8 * 1 / 100. Thus, 100 = x * 8 / 100. Solving gives x = $1250.

If the true discount on a sum of money is $100 at 8% per annum for 1 year, what is the sum?

If the true discount on a sum of money is $100 at 8% per annum for 1 year, what is the sum?

Step 1: Understand that the true discount is the amount deducted from the sum of money due to interest. In this case, the true discount is $100.
Step 2: Know that the formula for true discount is: True Discount = Sum * Rate * Time / 100.
Step 3: Identify the values: True Discount = $100, Rate = 8%, Time = 1 year.
Step 4: Substitute the known values into the formula: 100 = x * 8 * 1 / 100.
Step 5: Simplify the equation: 100 = x * 8 / 100 means 100 = (8x) / 100.
Step 6: Multiply both sides by 100 to eliminate the fraction: 100 * 100 = 8x, which gives 10000 = 8x.
Step 7: Divide both sides by 8 to solve for x: x = 10000 / 8.
Step 8: Calculate the value: x = 1250.
Step 9: Conclude that the sum of money is $1250.

True Discount – True discount is the difference between the present value and the future value of a sum of money, calculated based on the interest rate and time period.
Simple Interest Calculation – Understanding how to calculate simple interest and its application in determining the true discount.