Aptitude - True Discount - Discussion

I would explain this one, here is concept of Future Value & present value, If the person sold on the same day then he would get 600 as profit but here is term of 10% per annum interest which is time value of money, after two year he will get 600 as interest not as profit. So no profit no loss.

If we calculate 10 per annum interest for 2 years then we will get 600 or you may cross verify by finding the present value of 3600. It means if we discount the future cash flows we will get today value which is Rs. 3000. In short, we have to differentiate today profit & discounted value of future cash flows wink emoticon.

Why the amt is not taken to calculate gain?

Because actually, he is selling at 3600 (although at credit) but he is getting 600 as profit.

A = Pw+TD.
TD = Pw.R.N/100.
A = Pw +Pw.R.N/100.
A = Pw(1+R.N/1000.
Pw = A*100/100 +R.N.

Question is not clear, the rate of interest and due time are for cost price or selling price how we find out.

What I can understand C. P + S. I = S. P 3000 + (PTR/100) = 3000 + ( (300 * 2 * 10) /100) = 3600.
So C. P (3600) =S. P (3600) there is no gain.

You are correct @Amanda.

I think it means:.

If I did not buy that cow, but I deposited it into the bank, then after 2 years I will be able to get 3600 dollar. (because of interest).

So now I decide not to put the money into the bank but instead buy the cow, which would also give me 3600 2 years later.

So profit is 0.

@Jiten.

Your explanation is very useful to understand the problem. Thank you, sir.

Here the cp = 3000.
Now sp = p.w.
p.w = A - td = 3600 - p * 2 * 10/100 = 3000.
cp - pw = 0.

Thus 0 profit gain.

A person buy a watch for Rs. 1950 in cash and sells it same day at Rs. 2200 on credit for 1 year, if the rate of interest is 10%. How much he gains?

A person purchased a watch for Rs. 3000 and sold at 3600 on credit for 9 years at the rate of interest 7. 5%. What is the gain or loss to him?