IMPORTANT EXAMPLES | ||
Here Some Basic Formulas/Rules Are given below :- Suppose a man has to pay Rs. 156 after 4 years and the rate of interest is 14% per annum Clearly, Rs. 100 at 14% will amount to Rs. 156 in 4 years. So, the payment of Rs. 100 now will clear off the debt of Rs. 156 due 4 ,years hence. We say that :Sum due = Rs. 156 due 4 years hence; Present Worth (P.W.) = Rs. 100; True Discount (T.D.) = Rs. (156 - 100) = Rs. 56 = (Sum due) - (P.W.). We define : T.D. = Interest on P.W. Amount = (P.W.) + (T.D.). Interest is reckoned on P.W. and true discount is reckoned on the amount.
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