Find the present worth (PW) of a bill of ₹1764 due 2 years hence at 5% compound interest per annum.

Introduction / Context:This item specifies compound interest, not simple discounting. The present worth under compound interest is obtained by dividing the future value (face value) by (1 + r)^t, where r is per annum rate and t is in years.

Given Data / Assumptions:

• Face value at maturity F = ₹1764.
• r = 5% p.a.; t = 2 years.

Concept / Approach:For compound interest: PW = F / (1 + r)^t. This differs from TD/BD formulas which belong to simple-interest bill discounting. Use exact powers for accuracy.

Step-by-Step Solution:

Verification / Alternative check:Forward check: 1600 × 1.1025 = 1764, matching the given future sum.

Why Other Options Are Wrong:₹1200, ₹1400, ₹1800 are not equal to 1764 / 1.1025.

Common Pitfalls:Using simple-interest discounting formulas (TD/BD) instead of compound discounting when the problem explicitly states compound interest.

Final Answer:Rs. 1600