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Question 1185117: If 8,000 pesos is the present value of 11,000 pesos due at the end of seven months, what is the simple discount?
Found 2 solutions by Theo, ikleyn:
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! simple interest equation is:
f = i + p
i = p * r * n
f is the future value
i is the interest
p is the present value
r is the interest rate per time period
n is the number of time periods
in your problem:
f = 11000
p = 8000
i = 11000 minus 8000 = 3000
n = 7 months
r is the interest rate per month.
i believe that is what they are calling the simple discount, but i'm not sure because the terminology is not what i'm used to.
the formula becomes:
f = p + i
when f = 11000 and p = 8000, then:
11000 = 8000 + i.
solve for i to get:
i = 11000 - 8000 = 3000
i = p * r * n
i = 3000
p = 8000
n = 7
the formula becomes:
3000 = 8000 * r * 7
solve for r to get:
r = 3000 / (8000 * 7) = .0535714286.
that's the discount rate per month.
if you pay today, it's 8000
if you pay in 7 months, it's 11000
the finance charge is .0535714286 * 8000 per month that you delay payment.
in 7 months, the finance charge becomes 8000 * .0535714286 * 7 = 3000.
if this is not what you wanted, please clarify what it is that you did want.
Answer by ikleyn(52775)  (Show Source):
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