Discussion
A man wishes to sell his scooter. One buyer offers Rs. 12,000 cash, the other offers Rs. 12,880 payable after 8 months. If money is worth 18% per annum, which offer is better and by how much ?
Answer: C
Correct answer: The cash offer, by Rs. 500
Compare the two at the same date by reducing the credit offer to its present worth. With \(RT = 18 \times \tfrac{2}{3} = 12\):
\[PW = \frac{12880 \times 100}{112} = 11500\]
The cash offer of Rs. 12,000 is worth more today, so it is better by \(12000 - 11500 = \) Rs. 500.
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