BACK Let rate=R%per annum, Time= T years 1.Present worth (PW) = (100*Amount)/(100+(R*T)) = (100* TrueDiscount)/(R*T) 2.TrueDiscount (TD) = (P.W*R*T)/100 = (Amount*R*T)/(100+(R*T)) 3.Sum =(SimpeInterest*TrueDiscount)/(SimpleInterest-TrueDiscount) 4.SimpleInterest-TrueDiscount=SimpeInterest on TrueDiscount 5.When the sum is put at CompoundInterest,then PresentWorth=Amount/(1+(R/100))^T GeneralConcept: 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 Rs156 in 4 years So,the payment of Rs.100 now wil cear off the debt of Rs156 due 4 years hence We say that Sum due = Rs156 due 4 years hence Present Worth =Rs100 True Discount=Rs.156-Rs100=Rs56 =Sumdue-PW We define TrueDiscount= Interest on Present Worth(PW) Amount = PresentWorth+TrueDiscount BACK |