Find the present worth of a bill of Rs. 2420 due 2 years later at 10% compound interest. Also find the true discount?

Rs. 2000, Rs. 420
Rs. 2200, Rs. 520
Rs. 2100, Rs. 460
None of these

Correct Answer: Rs. 2000, Rs. 420

Explanation:

Here sum is put on compound interest,
∵ P.W. = A / (1 + r / 100)ⁿ = 2420 / (1 + 10 / 100)² = 2420 x 100 / 121 = Rs. 2000
⇒ T.D. = P.W. - P
∴ True discount = 2420 - 2000 = Rs. 420

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