True Discount is the method of calculation and collection of Interest upfront from the borrower while disbursing the loan at a specific rate of Interest at the same time same rate of interest is considered for calculating interest on interest and transfer the same to customer

Let rate = R% per annum and Time = T years. Then,

1. P.W. =

100 x Amount
100 + (R x T)

=
100 x T.D.
R x T

2. T.D. =

(P.W.) x R x T
100

=
Amount x R x T
100 + (R x T)

3. Sum =

(S.I.) x (T.D.)
(S.I.) - (T.D.)

4. (S.I.) - (T.D.) = S.I. on T.D.

5. When the sum is put at compound interest, then P.W. =

Amount
1 +(^{T}

R
100

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