Aptitude - True Discount - Discussion

@ Shalini Negi. The buyer here is referred to the first person, the one who bought the cow for 3000. The buyer pays the money in installments. So the interest is also to be paid. Since nothing is mentioned we go with simple interest.

The buyer receives a profit of 600 (3600-3000) on the first day.

He pays the interest for 2 years which is equal to 3000*2*10% = Rs. 600.

Hence at the end of 2 years, he receives no profit i.e., 600-600 = Rs. 0.

Value of cow is Rs.3000
Now
100----->10
3000---->?

3000*10
------------ =300
100

Now credit 2 years,
so, 300*2=600,
3000+600=3600,
3600=3600,
So 0 discount.

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.

You are correct @Amanda.

What is mean by P.W?

Please, clear the concept briefly.

The formula used is.

True discount = {Banker's discount x 100}/{100+ (rate x time)}.

Let us assume,
(P. W) 2 = present worth in second case.
P. A = Payable amount
T. D = True Discount
P. A = (P. W) 2 + T. D.
3600 = (P.W)2 + 600.

=>(P. W)2 = 3600 - 600 = 3000
Gain = (P.W)2-PW = 3000 - 3000 = 0,
%gain= (0/3000) * 100 = 0%.
So, the Answer will be 0%.

@All.

Here let's assume that I am selling the cow to you.
So, here I purchased with 3000. So to get any profit I need to sold it to you more than 3000.

Here you agree to pay 10% interest rate per annum for 2 years.

So, When I calculate with that interest, after 2 years my cow will cost 3600. And you pay exactly 3600.

So profit is 0 for me.

Hope this is clear explanation.

As simple as that, Frist man buy and sell a cow on the same day. And he buys bow on credit 3000 for 2year on 10% interest.

So he has to pay after two years. (3000*2*10) /100=600 as interest. Total is 3600.
And he sold the cow the same day in 3600 rs.
So, at the end he did not get any profit. i.e Zero gain.