suppose a man who has to pay Rs.156 after 4 years and the rate of interest is 14% per annum. Clearly, Rs.100 at 14% will amount to Rs. 156 in 4 years. So, the payment of Rs.100 now will clear off the debt of Rs,156 due 4 years hence, We say that :
Sum due =Rs, 156 due 4 years hence:
Present Worth (P.W)=Rs. 100.
True Discount (T.D.)=Rs.(156-100)=Rs .56=( Sum due )-(P .W.)
We define: T.D. = Interest on P.W.; Amount =(P.W)+(T.D.)