Find the present worth of a bill of Rs. 2420 due 2 years later at 10% compound interest. Also find the true discount?
Correct Answer: Rs. 2000, Rs. 420
Explanation:
Here sum is put on compound interest,
∵ P.W. = A / (1 + r / 100)n = 2420 / (1 + 10 / 100)2 = 2420 x 100 / 121 = Rs. 2000
⇒ T.D. = P.W. - P
∴ True discount = 2420 - 2000 = Rs. 420
