The true discount on Rs. 260 due after a specific duration is Rs. 20. What is the true discount for the same sum due in half that time at the same interest rate?
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Answer: B. Rs. 10.40
Explanation
True discount is proportional to the time duration for a given principal sum and interest rate. Halving the duration theoretically halves the true discount from twenty to ten rupees. Accounting for exact present value formulas and interest discounting yields a precise value of ten point forty. True discount represents the difference between the amount due and its present value calculated at simple interest. Time proportionality governs true discount calculations under uniform interest rate conditions. Financial mathematics uses present value formulas to discount future sums back to current monetary values.
Banking and finance applications use true discount formulas to price promissory notes and bills of exchange. Commercial discounting evaluates the time value of money when settling future financial obligations early. Actuarial calculations rely on accurate present value adjustments for multi-period financial assets. Option A represents the rough linear halving without accounting for exact present value formulas. Option C overestimates the true discount for the halved duration time period. Option D introduces an arbitrary monetary figure that fails the financial discounting equations.
- Subject
- Mathematics
- Category
- Mathematics
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- —
- Difficulty
- medium
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