Aptitude - True Discount - Discussion

The 2200 at the credit of 1 year means after one year, he gets 2200 so we have to find present value at which he sells watch and then subtract it from 1950.

So 2200= p + S.I.
S.I= 2200-p.

2200-p = (p*10*1)/100.
p=2000.
Therefore profit =2000-1950 = 50rs.

I am also getting 55 as the correct answer.

Anyone, please clarify this.

CP(cost price) = 1950.
SP(selling price) = x.
After 1 year total amount = 2200/- And rate(r) = 10%.
Simpe interest = (P*R*T)/100.
2200 = [(x*r*t)/100] + x.

2200 = x[(10*1)/100 + 1].
x = (2200*100)/110.
x = 2000.

Gain = sp - cp.
Gain = 2000 - 1950.
Gain = 50.

Here c.p = 1950.
If the rate of interest is 10% per annum.
10% of c.p= 195.
total c.p = 2145.
s.p = 2200.
profit = s.p - c.p
2200 - 2145 = 55.
So, profit = 55.

I think option A) 55 is the correct answer.

Amount = 2200, at interest 10%, for a credit period of 1 year,
Amount = (p*n*r)/100 + p,
2200 = (p * 1 * 10)/100) + p,
1.1 p = 2200.
p = 2000 (selling price),
profit = 1950 - 2000,
profit = 50.

Guys, this is just the matter of point of time.

Simply:.

Income = 2200 - 1950 = 250.
Interest to pay = 1950 * 10% = 195.
Net profit = 250 - 195 = 55 (I believe this is the correct one in common sense).
However, in financial term, if we consider the net profit at t = 0 (at year 0, exactly when the man took the credit) instead of t = 1 (when the man sells the watch), we need to discount the net profit by 10% (which is a discount rate for the loss of money value in general) and we have: 55/ (1 + 10%) = 50.