Discussion
What is the true discount on ₹1,060 due 9 months hence at 8% per annum?
Answer: D
Correct answer: ₹60
The true discount is the interest on the present worth, not on the face value, which gives \[ \text{TD} = \frac{A \times RT}{100 + RT}. \] Here \( R = 8 \) and \( T = \frac{9}{12} = 0.75 \) year, so \( RT = 6 \). Then \[ \text{TD} = \frac{1060 \times 6}{100 + 6} = \frac{6360}{106} = 60. \] The present worth is therefore \( 1060 - 60 = 1000 \), which checks: the interest on 1,000 at 8% for nine months is \( 1000 \times 0.06 = 60 \). The distractor 63.60 is what comes of taking the interest on the face value instead - \( 1060 \times 0.06 \) - and that figure is in fact the banker’s discount. Confusing the two is the commonest error in this topic.
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