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If the present value of a sum is $4500 and the bankers discount is $500, what is

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Question: If the present value of a sum is $4500 and the bankers discount is $500, what is the principal?

Options:

  1. $5000
  2. $5500
  3. $6000
  4. $6500

Correct Answer: $5000

Solution: 

Principal = Present Value + Bankers Discount = 4500 + 500 = $5000.

If the present value of a sum is $4500 and the bankers discount is $500, what is

Practice Questions

Q1
If the present value of a sum is $4500 and the bankers discount is $500, what is the principal?
  1. $5000
  2. $5500
  3. $6000
  4. $6500

Questions & Step-by-Step Solutions

If the present value of a sum is $4500 and the bankers discount is $500, what is the principal?
Correct Answer: $5000
  • Step 1: Identify the present value, which is given as $4500.
  • Step 2: Identify the bankers discount, which is given as $500.
  • Step 3: To find the principal, add the present value and the bankers discount together.
  • Step 4: Calculate the sum: $4500 (present value) + $500 (bankers discount) = $5000.
  • Step 5: The principal is $5000.
  • Present Value – The current worth of a sum of money that is to be received in the future, discounted at a specific interest rate.
  • Bankers Discount – The interest deducted in advance by the bank from the face value of a loan or investment.
  • Principal – The total amount of money that is being borrowed or invested, before any interest or fees are applied.
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