Aptitude - True Discount - Discussion

Ok let me make this clear to all.

The man bought it at Rs. 1950 now.

The question literally means that at the end of 1 year, the man got Rs. 2200.

So Rs. 2200 is the amount.

Amount = P+SI.

2200 = P + P*R*T/100.

2200 = P + P*10*1/100.

2200 = P + 0.1 P.

Deducing from here comes P (The sum of money which the man could have got in terms of cash 1 year ago) = Rs. 2000 which is Rs. 50 (2000-1950) more than the cost price of the product (Rs. 1950).

Here's my take on this:

1) By default:

Begin Year 1, he bought a watch for 1950.

End Year 1, he sold it for 2200.

2) If he deposited in a bank, he got a 10% interest:

Begin Year 1, he deposited 1950.

End Year 1, he withdrawn all out and got 1950*1.1 = 2145.

=> So at the end of year 0, he gained 2200-2145 = 55.

I don't think the author of the question intend for it as a Present Value type. The 4 answers clearly said "gains/loses", it is simple present tense, which means he only "gains" the money at the end of year 1.

He cannot gain any money when we calculate PV at the Begin of year 1, because he has not bought the watch or deposited the money yet!

Where is 100 come from?

Where is 100 come from?

2200 is the credit for after 1 year. So (2200/110)*100 = 2000.

So the amount might be 2000. So his gain must be 50.

If someone has sell the thing on credit then I should get interest. So profit should increase.

Suppose Present Worth of Rs. 2200 is A.

2200 = (A x 110)/100.

A = (2200 x 100)/110.

A = 2000.

Gain = 2000-1950 = 50.

@Ramesh is wrong.

How could he take interest @2200, which is the last amount to be paid i.e. interest is already included, so the principal on which interest should be calculated must be lesser than 2200 which is 2000+200 (@10%P.A.) and then the actual gain of rs 50. Out of interest is valid.

Correct answer should be 55 not the 50. As gain would be on the amount spent not on the 2200.

The fact is interest should be counted on 1950 as he would have invested it at the rate of 10% pa. So at current time he must be having 2145 if he would not have bought that watch, but he did and now he is selling it for 2200 and so he is gaining 2200-2145=55.

ANS: 55.

@Santosh:

I think we can not earn interest at the instance of time as it is matter of duration. So we can not consider here the interest on 2200 at the time of selling.