Question

3. Kathy buys a television set from a merchant who asks P1,250.00at the end of 60days...

3. Kathy buys a television set from a merchant who asks P1,250.00at the end of 60days (cash in 6o days). Kathy wishes to pay immediately and the merchant offers to compute the cash price on the assumption that money is worth 8% simple interest. What is the cash price today?

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Answer #1

Answer:

According to the question,

Amount = 1,250.00

Time = 60 days or 60/360 year (assuming 360 days per year)

Rate of Interest = 8% or 8/100 or 0.08

The formula to calculate cash price (Principal) is as follows:

Also,

or, Principal = 1,233.59

Hence, the Cash price today is 1,233.59

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