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ANNUAL INTEREST.

439. Annual interest is interest on the principal, and on each year's interest remaining unpaid.

Annual interest is allowed on promissory notes, and other contracts, which contain the words, with interest payable annually."

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1. Find the annual int. and amt. of $8000 for 5 yr., at 6%. Int. of $8000 for 5 yr. at 6% = $2400.

EXPLANATION.-The

int. on $8000 for 1 yr. at 6% is $180, and for 5 yr.

is $2400.

The int. for the first

66

=

$480 for 10 yr. at 6% $288. $2400+$288 $2688, annual int. $8000+$2688 = $10688, amount.

year, remaining unpaid, draws int. for 4 yr.; that for the second year, for 3 yr.; that for the third year, for 2 yr.; and that for the fourth year, for 1 yr., the sum of which is equal to the int. of $480 for 4 yr. + 3 yr. + 2 yr. +1 yr. = 10 yr.; and the int. of $480 at 6% for 10 yr. is $288. Hence the total amount of int. is $2400+ $288, or $2688, and the amt. is $10688. 2. What is the annual interest of $1500 for 4 yr. at 7%?

RULE.-Compute the interest on the principal for the given time and rate, to which add the interest on each year's interest for the time it has remained unpaid.

3. What will $3500 amt. to in 10 yr., annual int., at 8% ? 4. What is the difference between the annual interest and

the compound interest of $2500 for 6 yr. at 6%?

5. Find the amt. of $575, at 8% annual int., for 91 yr.

6. $600. NEW YORK, June 15, 1882. On demand, I promise to pay L. H. BLAKEMAN, or order, six hundred dollars, with annual int., at 6%. Value rec'd. HENRY BRIDGEMAN.

What amount will be due on this note June 15, 1884, no interest having been paid?

VERMONT RULE FOR PARTIAL PAYMENTS.

440. On all notes, bills, or other similar obligations, whether made payable on demand or at a specified time, WITH INTEREST, when payments are made, such payments shall be applied: first, to cancel the interest that has accrued at the time of such payments; and, second, to the extinguishment of the principal.

If payable WITH INTEREST ANNUALLY, the annual interests that remain unpaid shall be subject to simple interest, from the time they become due to the time of final settlement; but if in any year, reckoning from the time such annual interest began to accrue, payments have been made, the amount of such payments at the end of such year, with interest thereon from the date of payment, shall be applied: first, to cancel the interest upon the annual interest; second, to cancel the annual interest; and third, to the extinguishment of the principal.

$872.

ST. JOHNSBURY, VT., Nov. 22, 1878. 1. For value received, I promise to pay JAMES FERGUSON, or order, eight hundred seventy-two dollars, on demand, with interest annually. SYLVANUS E. BOYLE.

Indorsed as follows: April 4, 1879, $28; July 10, 1882, $94.40; Dec. 10, 1884, $6.72; Jan. 14, 1887, $396.

What will be due Dec. 28, 1888?

441. The NEW HAMPSHIRE RULE is the same as that of Vermont, with this provision, viz.:

If at the time of any payment, no interest is due, except what is accruing for the year, and the payment or payments are less than the interest due at the end of the year, then no interest is allowed on such payment or payments.

442. The CONNECTICUT RULE is the same as the UNITED STATES RULE (322), with this exception, viz.:

When LESS than a year's interest has accrued at the time of a payment, except it be the last payment, the difference between the amount of the principal for an ENTIRE year, and the amount of the payments made that year, will form the new principal.

If the interest which has accrued at the time of a payment exceeds the payment, compute interest upon the principal only. At the option of the teacher, the examples under the U. S. Rule (322) may be solved by the preceding rules.

FOREIGN

EXCHANGE.

443. Foreign exchange relates to remittances made between different countries.

The drafts or bills of exchange are expressed in the money of the country in which they are made payable.

Exchanges with Europe are effected chiefly through prominent financial centres, as London, Paris, Amsterdam, Berlin, Frankfort, etc.

Sterling exchange consists of bills on any part of Great Britain.

444. Quotations are the published rates at which bills. of exchange, stocks, bonds, etc., are bought and sold in the money market.

Thus, quotations of exchange on London give the value of £1 sterling in dollars and cents; on Paris, Antwerp, and Geneva, the value of $1 in francs; on Amsterdam, the value of 1 guider or florin in cents; on Hamburg, Frankfort, and Berlin, the value of 4 marks in cents.

445. A set of exchange is a bill drawn in triplicate, named, FIRST, SECOND, and THIRD of exchange, each copy being valid until the amount of the bill is paid. These copies are sent by different mails, to provide against miscarriage. When one is paid, the others are void.

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446. To find the cost of a foreign bill of exchange.

1. Find the cost in New York, of the following bill on London, at 3 da. sight, exchange quoted at $4.871.

£500.

New York, Aug 23, 1854

At sight of this First of Exchange, (Second and Third unpaid) pay to the order of John Walker & Co., Live Hundred Gounds sterling value received, and charge the same to the account of To Prown, Shipley & Co.

London, England.

Brown Brothers & Co

SOLUTION.-$4.875 × 500 = $2437.50, cost of the bill, Ans.

2. Find the cost of a bill on Paris, for 495 francs, at 5.15. 3. Find the cost of a bill of exchange on Berlin for 1750 marks, quoted at 961.

SOLUTION.-$.9625÷4 × 1750

= $421.09, cost of the bill.

FORMULAS:

1. Face x value of monetary unit in U. S. money; or 2. Face value of $1 in foreign money,

Find the cost of a bill

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4. On Liverpool, for £600 15s., at $4.863, brokerage %. 5. On Geneva, Switzerland, for 5460 francs, at 5.214, brokerage 1%.

6. On Hamburg, for 2560 marks, at 95§, brokerage 1%.

7. On Amsterdam, for 3000 guilders, quoted at 41, brokerage 1%.

8. On Dublin, for £384 10s. 6d., exchange quoted at $4.881. 9. On Bremen, for 2872 marks, exchange at 96ğ.

10. On Antwerp, for 2750 francs, exchange being 5.19.

11. Bought exchange on Amsterdam, at 414, for 3750 guilders; on Hamburg, at 95 for 1000 marks; and on Lendon for £500, at $4.85. What was the cost of the whole ?

447. To find the face of a bill of exchange.

What will be the face of a bill

1. On London, that can be bought for $5488.26, exchange selling at $4.85 ?

SOLUTION.-$5488.26÷$4.85 = 1131.6, or £1181.6 = £1131 12s.

2. On Paris, bought for $325, exchange at 5.17? SOLUTION.-5.17 fr. × 325 = 1680.25 francs.

3. On Hamburg, bought for $4000, exchange quoted at 96 ? SOLUTION.-($4000÷$.96) × 4 = 16666 marks.

FORMULAS:

1. Cost÷value of monetary unit in U. S. money; or

2. Cost value of $1 in foreign money,

X

Find the face of a bill

= face.

4. On Manchester, Eng., bought for $7500, exchange 4.86. 5. On Frankfort, bought for $395.75, exchange at 951. 6. On Geneva, Switzerland, bought for $4856, at 5.224. 7. On Amsterdam, bought for $3750.67, exchange at 421. 8. On Berlin, bought for $4000, exchange being 933. 9. A merchant in New Orleans gave $6186, currency, for a bill on Paris, at 5.154. What was its face?

10. What is the face of a bill on Antwerp, that may be purchased in New York for $2500, exchange at 5.16?

11. A draft on Philadelphia cost £125 in Birmingham, Eng., exchange selling for 4.855; required the face of the draft.

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