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The true discount on a bill for Rs. 2520 due 6 months hence at 10 % per annum is :
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- Rs. 180
- Rs. 140
- Rs. 80
- Rs. 120
Correct Option: D
Given in the question,
Face Value = 2520;
Time = 6 months = 1/2 year
Rate of interest = 10 %
As we know the formula,
True Discount = Face Value x ( Rate of Interest x Time in years ) / ( 100 + Rate of interest x Time )
⇒ True Discount = 2520 x (10 x 1/2 ) / (100 + (10 x 1/2 ))
⇒ True Discount = 2520 x ( 5 ) / (100 + ( 5 ))
⇒ True Discount = 2520 x 5 /105
⇒ True Discount = 2520 / 21
⇒ True Discount = Rs. 120
