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Question
State True or False with reason:-
Discounting is a device to convert the bill into its present value.
Options
True
False
Solution
This statement is True.
When the drawer or holder of the bill approaches the bank to discount the bill, the bank pays the bill amount after deducting a certain amount (which is known as discounting charges). It means the conversion of the bill into its present value in cash. So, we can say that discounting is a device to convert the bill into its present value.
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Conversion of Bill of Exchange into its present value.
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