Question : The difference between simple interest and the true discount on Rs. 2400 due 4 years hence at 5% per annum simple interest is:
Option 1: Rs. 30
Option 2: Rs. 70
Option 3: Rs. 80
Option 4: Rs. 50
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Correct Answer: Rs. 80
Solution :
Given:
A = Rs. 2400
R = 5%
T = 4 years
$\therefore$ True Discount = $\frac{A\times R\times T}{100+R\times T}=\frac{2400\times 4\times 5}{100+20}$ = Rs. 400
$\therefore$ Simple interest − True discount $=\frac{\text{True discount}\times R\times T}{100}=\frac{400\times 5\times 4}{100}=$ Rs. 80
Hence, the correct answer is Rs. 80.
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