Short Methods

Frequently interest at 6% can be computed much more easily by what is known as the Bankers' Sixty-Day Method, the rule for which is given below.

Rule.

PARIS STOCK EXCHANGE

To find the interest for 60 days move the decimal point in the principal two places to the left; for 6 days move the decimal point in the principal three places to the left. From these results find the interest for the required time.

EXAMPLE 1. Find the interest on $840 for 4 months, 24 days, at 6%.

$8.40 Interest for 60 days (or 2 months)

2

$16.80 Interest for 4 months

3.36 Interest for 24 days

$20.16 Interest for 4 months, 24 days

$.840 Interest for 6 days

4

$3.36 Interest for 24 days

EXAMPLE 2. Find the interest on $420 for 8 months, 15 days,

In each of the following examples find the interest at 6% for the time indicated:

When interest is computed at 4%, 5%, 7%, or 8% we may use the following rules.

Rules. - To find interest at 4% decrease the interest at 6% by of itself.

To find interest at 5% decrease the interest at 6% by of itself.

To find interest at 7% increase the interest at 6% by of itself.

To find interest at 8% increase the interest at 6% by of itself.

When interest is computed at 41 %, 71%, or other fractional rate we may use the following rules.

Rules. To find interest at 41% decrease the interest at 6% by of itself. To find interest at 71% increase the interest at 6% by of itself.

Exercise

In the first five of the following examples find the interest at 4%, in the last five, at 71%

Persons who have much computing of interest to do use interest tables of various kinds. In determining the amount of time from one date to another, for example, the following table is used.

FROM
ANY

DAY

OF

BANKERS' TIME TABLE

TO THE SAME DAY OF THE NEXT

Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.

Apr. 275 306 334

365

30

61

91 122

153 183 214 244

335

365

304

334

274 304

May 245 276 304
June 214 245 273
July 184 215 243
Aug. 153 184 212 243 273 304 334 365
Sept. 122 153 181 212 242 273 303 334
Oct. 92 123 151 182 212 243 273 304 335 365 31 61
Nov. 61 92 120 151 181 212 242 273 304 334 365 30
Dec. 31 62 90 121 151 182 212 243 274 304 335 365

31

61

Compound Interest

Compound Interest is interest computed for stated intervals on the sum of the principal and unpaid interest. Customarily interest is compounded either annually or semiannually.

EXAMPLE. To what will $ 400 amount in 2 years, 6 months, at 4%, compounded annually?

Exercise

Find the amount at compound interest for each of the following:

Compound interest is ordinarily figured from a table such as the one given below.

COMPOUND INTEREST TABLE

Amount of $1, at Various Rates, Interest Compounded Annually.