Discussion

The true discount on Rs. 5125 due 6 months hence is Rs. 125. The rate of interest per annum is:

Answer: A

\[ \text{PW} = 5125 - 125 = \text{Rs. } 5000 \]

The true discount is simple interest on that present worth, over \( T = \dfrac{6}{12} = 0.5 \) year:

\[ 125 = \frac{5000 \times R \times 0.5}{100} = 25R \]

\[ R = \frac{125}{25} = 5\% \text{ per annum} \]

The half-year must be converted before dividing; leaving \( T = 6 \) would give a rate about twelve times too small.

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