Under a simple interest rate of 10% per annum, what is the true discount on Rs. 10,000 due after one year?
Correct answer: B. Rs. 909.09
- A. Rs. 900.00
- B. Rs. 909.09
- C. Rs. 1,000.00
- D. Rs. 1,111.11
Explanation
The present value is 10,000 divided by 1.10, or Rs. 9,090.91. True discount is the maturity value minus present value, giving Rs. 909.09. Rs. 1,000 is the simple bank discount on the maturity value.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? support@testustad.com
Practise Financial Mathematics: Interest, Annuities and Discounting
30 free Financial Mathematics: Interest, Annuities and Discounting MCQs from Quantitative Methods, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Quantitative Methods questions like this
Quantitative Methods is on this paper prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for it.
More Financial Mathematics: Interest, Annuities and Discounting questions
A sum of Rs. 12,000 grows to Rs. 13,600 in 4 years under simple interest. What is the annual interest rate?
A sum of Rs. 10,000 is invested at a nominal rate of 10% per annum compounded semiannually. What is its value after 3 years?
What is the amount after 2 years on Rs. 10,000 invested at a continuously compounded annual rate of 6%?
A growing perpetuity pays Rs. 2,000 at the end of the first year, with payments increasing by 3% annually. If the discount rate is 8%, what is its present value?
A loan of Rs. 50,000 carries annual interest of 10% and requires an annual payment of Rs. 20,000. What is the outstanding balance immediately after the first payment?
What annual effective discount rate is equivalent to an annual effective interest rate of 10%?