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301. Compound interest is interest on both principal and interest, when the interest is not paid when due.

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302. 1. Find the amt. and the comp. int. of $640, for 2 yr. 4 mo. 15 da., at 5% ?

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RULE.-Find the amount of the given principal for the first period of time. Using this amount as a new principal, find its amount for the second period, and so on for the entire time. 2. Subtract the given principal from the last amount, and the remainder will be the compound interest.

If the interest is compounded semi-annually, the rate % is one-half the yearly rate; if quarterly, one-fourth the yearly rate. Thus, 2 yr. 6 mo. in semi-annual payments at 6% is the same as ó yr. at 3%; and 1 yr. 9 mo. quarterly, at 8%, the same as 7 yr. at 2%.

Find the amount and the compound interest of

2. $312, for 3 yr. at 6%; $800, for 4 yr. at 4%.

3. $640, for 4 yr. at 5%; $376, for 3 yr. 8 mo. 15 da. at 6%.

4. $1200, for 2 yr. 4 mo. at 41%; for 3 yr. 8 mo. at 7%.

5. $400, for 1 yr. 6 mo. at 7%, payable semi-annally.

6. $2000, for 1 yr. at 8%, payable quarterly.

7. What is the annual income from $2500, at 6%, interest added to the principal quarterly?

NOTES.

303. A promissory note is a written promise to pay a certain sum, either on demand, or at a specified time.

The face of a note is the sum of money made payable by it.
The maker or drawer of a note is the party who signs it.

The payee of a note is the party to whom or to whose order the money is made payable.

An endorser of a note is the party who writes his name on the back of the note, and thereby makes himself responsible for its payment.

The following is a simple form of a negotiable note:

$5000.

Poston, Jan. 1, 1884.

Three months after date I promise to pay to Leth A. Low, or order Five Thousand Dollars, with interest Value received.

Alex. A. Rice.

A note should always contain the words "value received.”

A note containing the words "with interest," or "with use," draws interest from date. When these words are omitted, the note will not draw interest until after it is due.

The legal rate prevails when no rate is mentioned.

304. A negotiable note is one made payable to bearer, or to any person's order. It can then be sold, or transferred. If the words "or order," or "or bearer" are omitted, the note is not transferable, and is payable only to the person whose name is mentioned

in it.

A note made by a minor, or on Sunday, is void.

An endorser of a note may prevent his own liability to be sued, by writing upon it, "without recourse," or similar words.

DISCOUNT.

305. Discount is an allowance made for the payment of a debt, note, or other obligation before it is due.

306. The present worth of any debt, note, or other obligation, is the amount of it, less the discount.

30%. The true present worth of a debt payable at a future time without interest, is such a sum as, being put at legal interest, will amount to the debt when it becomes due.

308. The true discount is the difference between the whole debt and the true present worth.

Time is always an element in the operations of true discount.

309. The corresponding terms of true discount and percentage are as follows:

1. The true present worth is the base.

2. The rate % is the rate.

3. The true discount is the percentage. 4. The whole debt is the amount.

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310. To find the present worth and true discount.

1. Find the present worth and the true discount of $362.95, payable in mo. 12 da., at 6%.

EXPLANATION.-The amt. of $1 for 7 mo. 12 da., at 6% = $1.037. The present worth is $362.95 ÷ 1.037

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$350. $12.95.

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Find the present worth and discount,
2. Of $614.40, due in 4 mo. 24 da., at 6%.
3. Of $2640, due in 9 mo. 18 da., at 7%.
4. Of $475, due in 7 mo. 6 da., at 5%.

5. A merchant buys goods for $4200 on 4 mo. credit, but is offered a discount of 3% for cash. If money is worth 1% a month, what is the difference ?

6. If I sell goods for $1250 on 6 months' credit, which cost me $1195 cash, what is my loss, money being worth to me 10%?

7. What is the present worth of a debt for $1005, on which $475 is to be paid in 10 mo., and the remainder in 1 yr. 3 mo., the rate of interest being 6% ?

8. What is the difference between the interest and true discount of $130, due 10 mo. hence, at 10%?

9. A person sold goods to the amount of $3750, 15% payable in cash, 25% in 3 mo., 20% in 4 mo., and the remainder in 6 mo. What ready money would discharge the whole debt, money being worth 6% ?

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311. Bank Discount is simple interest paid in advance to a bank, for the payment of a note before it becomes due.

312. Days of grace are three additional days, usually allowed by law for the payment of a note after the expiration of the time specified in it.

313. The maturity of a note is the expiration of the whole time, including the days of grace.

314. The term of discount is the time from the discount of a note to its maturity.

315. The proceeds of a note is the sum received for it when discounted, or the face of the note less the discount.

316. A pròtest is a formal declaration in writing, made by a notary public, giving legal notice to the maker and the indorsers of a note, of its non-payment.

1. The failure to protest a note on the third day of grace releases the indorsers from all obligation to pay it.

2. If the third day of grace or the maturity of a note occurs on Sunday or a legal holiday, it must be paid on the day previous.

317. The corresponding terms are as follows:

1. The face of the note is the base.

2. The rate % is the rate.

3. The bank discount is the percentage.

4. The term of discount is the time.

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318. To find the bank discount and proceeds of a note.

1. Find the bank discount and proceeds of a note for $450, due in 60 da., at 6%.

EXPLANATION.-The term of discount is 63 da.
The face of the note is $450.

$4.725. $445.275 (242, 3).

The discount is the int. of $450 for 63 da., at 6%
The proceeds are $450 - $1.725

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=

445,50

FORMULAS: 2. Face
1. Face × rate × term of disc't = bank disc't.
2. Face bank discount = proceeds.

Find the bank discount and proceeds of 2. $368 for 90 da., at 7%. 6.

$875 for 3 mo. 10 da., at 6%. €86.4

3. $597.50 for 60 da., at 6%. 4. $684.60 for 4 mo., at 5%. 5. $1080 for 78 da., at 8%.

7.

$1250 for 2 mo. 15 da., at 5%.

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10. Find the bank discount on a note at 6 mo., for $672.50,

at 6%.

11. What will be the proceeds of a note at 3 months for $1500, discounted at a bank, at 7%?

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