TestUstad

A man wants to sell his scooter. There are two offers, one at Rs. 12,000 cash and the other a credit of Rs. 12,880 to be paid after 8 months, money being at 18% per annum. Which is the better offer?

Correct answer: A. Rs. 12,000 in cash

  • A. Rs. 12,000 in cash
  • B. Rs. 12,880 at credit
  • C. Both are equally good
  • D. Rs. 18.33

Explanation

The present value of Rs. 12,880 due after 8 months is Rs. 12,880/(1 + 18% x 8/12) = Rs. 12,880/1.12 = Rs. 11,500. Since Rs. 12,000 cash is greater than Rs. 11,500 in present value, the cash offer is better. The likely trap is choosing Rs. 12,880 at credit because its stated amount is larger, without discounting it for the 8-month delay.

Written and checked by , MS Computer ScienceLast updated
Report an error

The more specific you are, the faster it gets fixed. A source beats an opinion.

Prefer email? [email protected]

About Profit and Loss

Profit and loss compare the cost price and selling price of an item, using profit or loss percentages based on the cost price unless stated otherwise. Questions include marked price, discount, successive discounts, commission, and finding an unknown price, with care needed to distinguish discount from loss.

Practise Arithmetic

1,060 free Arithmetic MCQs from Mathematics, each with the correct answer and an explanation. Unlimited attempts, no account needed.

Start a free Arithmetic testAll Arithmetic MCQs

Discussion

Stuck on an option, or know a faster way to get there? Ask or explain it here.

No comments yet. Be the first to explain this one.

Exams that ask Mathematics questions like this

Mathematics is on 76 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.

Lecturer Mathematics Test Mathematics80 MCQsNET Mathematics80 MCQsSubject Specialist Mathematics Test Mathematics80 MCQsATS Mathematics30 MCQsCA QAT Mathematics30 MCQsCTS Mathematics30 MCQsECAT Mathematics30 MCQsETEA Engineering Admission Test Mathematics30 MCQsETEA Recruitment Tests Mathematics30 MCQsGAT General Mathematics30 MCQsGIKI Mathematics30 MCQsNAT Mathematics30 MCQsNED Mathematics30 MCQsNTS Mathematics30 MCQsOTS Mathematics30 MCQsPIEAS Mathematics30 MCQsPTS Mathematics30 MCQsSTS Mathematics30 MCQsUTS Mathematics30 MCQsBCAT Mathematics25 MCQsISSB Mathematics25 MCQsCSS MPT Mathematics20 MCQsPAF Mathematics20 MCQsPAF Airman Mathematics20 MCQsPakistan Army Commissioned Officer Test Mathematics20 MCQsPakistan Navy Test Mathematics20 MCQsPatwari Test Mathematics20 MCQsPMA Long Course Test Mathematics20 MCQsPMD Mathematics20 MCQsComputer Operator Test Mathematics15 MCQsDEO Mathematics15 MCQsEducators ESE Test Mathematics15 MCQsEducators SESE Test Mathematics15 MCQsEducators SST Test Mathematics15 MCQsFBR Mathematics15 MCQsJEST Mathematics15 MCQsJunior Clerk Test Mathematics15 MCQsLAT Mathematics15 MCQsNADRA Mathematics15 MCQsPST Mathematics15 MCQsSub Registrar Test Mathematics15 MCQsAJKPSC Mathematics10 MCQsAssistant BS-16 Test Mathematics10 MCQsBPSC Mathematics10 MCQsECP Mathematics10 MCQsFIA Mathematics10 MCQsFPSC Mathematics10 MCQsGBPSC Mathematics10 MCQsIB Mathematics10 MCQsIntelligence Officer Mathematics10 MCQsKPPSC Mathematics10 MCQsMES Mathematics10 MCQsNAB Mathematics10 MCQsNational Highways and Motorway Police Test Mathematics10 MCQsPakistan Railways Recruitment Test Mathematics10 MCQsPCS Mathematics10 MCQsPIA Mathematics10 MCQsPPSC Mathematics10 MCQsPunjab Police ASI Test Mathematics10 MCQsPunjab Police Sub Inspector Test Mathematics10 MCQsSNGPL Mathematics10 MCQsSPSC Mathematics10 MCQsSub Engineer Civil Test Mathematics10 MCQsSub Engineer Electrical Test Mathematics10 MCQsSub Engineer Mechanical Test Mathematics10 MCQsTehsildar and Naib Tehsildar Test Mathematics10 MCQsWAPDA Mathematics10 MCQsANF Mathematics5 MCQsASF Mathematics5 MCQsCTD Mathematics5 MCQsElite Police Force Test Mathematics5 MCQsPakistan Army Soldier Test Mathematics5 MCQsPakistan Rangers Test Mathematics5 MCQsPERA Force Test Mathematics5 MCQsPunjab Police Constable Test Mathematics5 MCQsRescue 1122 Test Mathematics5 MCQs

More Profit and Loss questions

If Rs. 10 be allowed as true discount on a bill of Rs. 110 due at the end of a certain time, then the discount allowed on the same sum due at the end of double the time is:

The true discount on a bill due 9 months hence at 16% per annum is Rs. 189. The amount of the bill is:

A man buys a watch for Rs. 1950 in cash and sells it for Rs. 2200 at a credit of 1 year. If the rate of interest is 10% per annum, the man:

A trader owes a merchant Rs. 10,028 due 1 year hence. The trader wants to settle the account after 3 months. If the rate of interest 12% per annum, how much cash should he pay?

The true discount on Rs. 2562 due 4 months hence is Rs. 122. The rate percent is:_________?

A man purchased a cow for Rs. 3000 and sold it the same day for Rs. 3600, allowing the buyer a credit of 2 years. If the rate of interest be 10% per annum, then the man has a gain of: