Aptitude - Banker's Discount - Discussion

Can anyone explain me, please?

Thanks a lot @Cherishy and @Sukumar.

Please explain the present worth and principal, what is the difference between it?

Can you plzz explain the problem along with sum?

Following is explanation:

Banker's Discount (BD) is simple interest on Face Value of Bill (F).

Given that, BD = Rs. 72, Time (T) = T year, Interest Rate (R) = R.

We know, BD = F*T*R/100 = 72.

=> 72*100/F = T*R........Equation (1).

True Discount (TD) is simple interest on Present Worth (PW).

We know, TD = PW*T*R/100 = 60.

=> 60*100/PW = T*R..........Equation (2).

From equation (1) & (2),

=> 72*100/F = 60*100/PW.
=> 72*100/60*100 = F/PW.

=> 6/5 = F/[F/{1+(T*R/100)}].

We know, PW = F/{1+(T*R/100)}.

=> 6/5 = 1+(T*R/100).
=> (6/5)-1 = (T*R/100).

=> (1/5) = (T*R/100).

=> (1/5)*100 = T*R...........Equation (3).

From Equation (1) & (3),

=> (1/5)*100 = 72*100/F.
=> F = 72*100/(100/5).
=> F = 72*5 = Rs. 360.

Thanks.

The banker deducts the simple interest on the face value for the unexpired time. This deduction is known as Bankers Discount (BD).

The present value is the amount which, if placed at a particular rate for a specified period will amount to that sum of money at the end of the specified period. The interest on the present value is called the True Discount (TD).


P=present value; S=sum;.

(P*R*T)/100 + P = S i.e. TD+P=S......(1).
P*R*T/100=TD and S*R*T/100=BD;
Therefore P= S*TD/BD......(2).

Solving 1 and 2 we get the result.

How does this formula come?

Can some one explain how this formula for sum has came?

I also want to learn this formula how it can be formulated.

What is banker's discount and true discount?