341. What annual income 1. Will be realized by investing $22260 in 44% bonds, bought at 921, brokerage %? SOLUTION. (921% +1%) of $100 = $92, cost of 1 share; 2. What income will $19650 invested in U. S. 34's at 974 yield, brokerage 1%? 3. If $48000 is invested, in 5% stock, at 95, and 1 in 6% stock at 112, brokerage %, what annual income is secured? 4. A farm which rents for $411.45 per annum, is sold for $8229, and the proceeds invested in 5% bonds at 105, brokerage %. Is the yearly income increased or diminished, and how much? 342. Find the rate of income 1. Realized from bonds bought at 112, and paying 4% semiannual dividends. EXPLANATION.-Since $112, the cost of 1 share, pays $8 annually, the income is of the investment, or Tix of 100% = 74%. FORMULA: Annual income per share = rate of income. 2 What per cent. of his money will a man obtain by investing in 6% stock at 108%? At a discount of 16%? 3. If stock paying 10% dividends is at a premium of 121%, what % of income will be realized on an investment in it? 4. Which will yield the better income, 8% bonds at 110, or 5's at 75; 5's at 70, or 6's at 80 ? 5. Which is the more profitable, and how much, to buy N. Y. 7's at 105, or 6% bonds at 84? EX CHANGE. 343. Exchange is a method of remitting money from one place to another, or of making payments by written orders, called bills of exchange or drafts. 344. Exchange is of two kinds-domestic and foreign. 345. Domestic or inland exchange relates to remittances made between different places of the same country. An inland bill of exchange is commonly called a draft. 346. A draft or bill of exchange is a written request or order upon one person to pay a certain sum to another person, or to his order, at a specified time. The drawer of a draft or bill is the party who signs it; the drawee is the party to whom the order is addressed, and when he accepts the order, he becomes the acceptor. The payee is the party to whom the money is directed to be raid. The buyer or remitter is the party who purchases it. The buyer and payee may be the same party. A sight draft or bill is one that requires payment to be made when presented. A time draft or bill is one that requires payment to be made at a certain specified time, after date, or after being presented. 347. The acceptance of a draft or bill is the agreement by the drawee to pay it at maturity. This is done by writing the word "Accepted" across the face of the bill and signing it. Three days of grace are allowed on time drafts, the same as on notes, but not on sight drafts. When a bill is protested for non-acceptance, the drawer is bound to pay it immediately. 348. The course of exchange is the current price paid in one place for bills of exchange on another place. Exchange is at par, above par, or below par, according to the fluctua tions of trade between the two countries or places. 349. In exchange, the following are corresponding terms: 1. The face of the draft is the base. 2. The rate % of exchange is the rate. 3. The premium or discount is the percentage. 4. The cost of the draft is the amount or difference. WRITTEN EXERCISES. 350. Find the cost of the following sight draft, at 1011. $1750. SPRINGFIELD, July 1, 1884. At sight, pay to the order of L. A. GRAY, Seventeen hundred fifty dollars, and charge the same to the account of O. M. BAKER. TO BAILEY & NOYES, SOLUTION.-$1750 × 1.011 FORMULAS: Face x == $1771.871, cost. = cost. 6. For $1200, discount 1%. For $2480, discount 1. 8. For $560.80, discount 3%. 9. For $784.50,discount 14%. 10. Find the cost of the following time draft, at 11% premium, interest 6%: $200.100 Prsten, March 1, 1883. Thirty days afte in pay to the order of Timothy Marong Tu Hundred $100 Dollars, and place the same to be account of James A. Brown. New Orleans. SOLUTION.-$1.0175, course of exch.; $0055, bank dis. of $1, for 33 da.; $1.012, cost of exch. of $1; $1.012 × 200.50 $202.91, cost of dft. = FORMULA: Face x cost of $1 exchange cost of draft. Find the cost of time drafts 11. For $4720, at 30 da., premium 14%, interest 6%. 12. For $5275, at 90 da., discount 1%, interest 7%. 13. For $6400, at 90 da., premium 1%, interest 6%. 14. What must be paid in Philadelphia for a draft on St. Paul, drawn at 90 da., for $4800, the course of exchange being 101, and interest 6%? 351. Find the face 1. Of a sight draft, bought for $711.90, discount 11%. SOLUTION.—$711.90 ÷ .98875 = $720, face. 2. Of a draft on St. Louis, at 90 da., bought for $4500, exchange being at 1011% ? SOLUTION.-$1.015 = course of exchange; $4502.25, face. cost of $1 exchange = face. Find the face of a sight draft bought 3. For $840, premium 14%. 5. For $2600, discount 14%. 4. For $1675, premium %. 6. For $972.50, discount %. 7. An agent in Syracuse, N. Y., having $1324.74 due his employer, is instructed to remit the same by a draft drawn at 30 days. Find the face of the draft, exchange being 1013. 8. What is the face of a 60 da. draft, at 1% discount, that can be bought for $750, money being worth 7%? 9. How large a draft can be bought for $1875, payable in 60 da., exchange being 101, interest 8% ? 10. An agent sold 2780 lb. of cotton at 11 cts. a pound. If his commission is 24%, and exchange 981%, how large a draft can he buy to remit to his consignor ? EQUATION OF PAYMENTS. 352. Equation of payments is the process of finding the average time for the payment of several sums, due at dif ferent times, without loss to debtor or creditor. 353. The equated time is the date at which the several debts may be discharged by one payment. 354. The term of credit is the time at the expiration of which a debt becomes due. 355. The average term of credit is the time to elapse before several debts due at different dates may all be paid at once, without loss to either party. 356. To find the equated time and the average of terms of credit, beginning at the same date. 1. Of $300 due in cash, $500 due in 3 mo., $750 due in 8 mo., and $950 due in 10 mo. 300 x 0 = 0 500 × 3 = 1500 750 × 8 = 6000 950 x 10 = 9500 ) 17000 2500 EXPLANATION.-On $300, the first payment, there is no interest, since it is due in cash; the int. of $500 for 3 mo. is the same as the int. of $1 for 1500 mo.; the int. of $750 for 8 mo. is the same as that of $1 for 6000 mo. ; and the int. of $950 for 10 mo. is the same as the int. of $1 for 9500 mo. Therefore, the whole amt. of interest is that of $1 for 1500 mo. +6000 mo. +9500 mo., or 17000 mo. ; but the whole debt is $2500; and the interest of $1 for 17000 mo. is equal to the interest of $2500 for of 17000 mo., or 6 mo. 6 mo. 2. Find the average term of credit of $800 due in 1 mo., $750 due in 4 mo., and $1000 due in 6 mo. |