Find the present worth of Rs. 1,404 due in two equal half-yearly instalments at 8% p.a. simple interest.
Aptitude
True Discount
Difficulty: Medium
Choose an option
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ARs. 1,320
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BRs. 1,325
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CRs. 1,330
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DRs. 1,350
Answer
Correct Answer: Rs. 1,325
Explanation
Given data
- Total due = Rs. 1,404 split equally into two instalments
- Each instalment = Rs. 702
- Due times: 0.5 year and 1 year from now
- Rate r = 8% p.a.
Concept / Approach
Discount each instalment to present under simple interest and add: PW = Σ [Instalment / (1 + r × ti)]
ComputationPW = 702/1.04 + 702/1.08= 675 + 650 = 1,325
Verification
Accruing each PW part forward: 675 × 1.04 = 702 and 650 × 1.08 = 702.Final AnswerPresent worth = Rs. 1,325.