True Discount Formulas - Aptitude Questions and Answers

Important Concepts

Suppose a man has borrowed Rs. 100 and he has to pay after 4 years at 14% interest per annum. Then he has to pay Rs. 156 after 4 years.

The amount to be paid (i.e) Rs. 156 is called Sum Due.

The money to be paid right now (i.e) Rs. 100 is called Present Worth. (P.W).

Now, we difine:

True Discount (T.D.) = Sum Due – P.W. = 156 – 100 = Rs. 56

Amount = P.W. + T.D.

Note: Interest is calculated on present worth and true discount is calculated on the amount.

Important Formulae

Let rate = R% per annum and Time = T years. Then,

P.W. =

100 x Amount

100 + (R x T)

100 x T.D.

R x T

T.D. =

(P.W.) x R x T

100

Amount x R x T

100 + (R x T)

Sum =

(S.I.) x (T.D.)

(S.I.) - (T.D.)

(S.I.) - (T.D.) = S.I. on T.D.

When the sum is put at compound interest, then P.W. =

Amount

1 +

100