INTEREST.

272 INTEREST is a percentage paid for the use of money. PRINCIPAL, OF BASE, is the money on which interest is paid. RATE of interest is the per cent. paid per year.

AMOUNT is the sum of the principal and interest.

PER ANNUM means by the year.

273. In interest, by general custom, a year is reckoned at 12 months, each having 30 days. The Rate of Interest is generally fixed by law, and is called Legal Interest. Any rate above the legal rate is usury, and is generally forbidden by law.

274. In most of the States, the legal rate is 6 per cent.; in New York, South Carolina and Georgia, it is 7%; and in some of the other States the rate is fixed as high as 10 per

cent.

275. There are five parts in interest: 1st, principal; 2d, rate: 3d, time; 4th, interest; 5th, amount.

CASE I.

276. To find the interest of any principal for one or more years

1. What is the interest of $3920 for 2 years, at 7 per cent. ?

ANALYSIS.-In this example, the base is $3920, the rate 7%, and the interest for 1 year is the percentage. this product multiplied by 2, the numter of years, gives the interest for 2 years; hence,

Rule.-Multiply the principal

$3920

OPERATION.

.07 rate.

$274.40 int. for 1 year. 2 No. of years.

$548.80 interest.

by the rate, expressed decimally, and the produci by the num ber of years.

Examples.

1. What is the interest of $675 for 1 year, at 61 per cent. ? 2. What is the interest of $871.25, for 1 year, at 7%?

3 What is the interest of $535.50, for 7 years, at 6%? 4 What is the interest of $1125.885, for 4 years, at 8% 5 What is the interest of $789.74, for 12 years, at 5%? 6 What is the interest of $2500, for 7 years, at 71% ? 7. What is the interest of $3153.82, for 2 years, at 41 ? 8. What is the amount of $199.48, for 16 years, at 7%? 9. What is the amount of $897.50, for 3 years, at 8% ? 10. What is the interest of $982.35, for 4 years, at 63%? 11. What is the amount of $1500, for 5 years, at 51%? 12. What is the interest of $1914.10, for 6 years, at 31%? 13. What is the interest of $350, for 21 years, at 10%? 14. What is the amount of $628.50, for 5 years, at 12%? 15. What is the amount of $75.50, for 10 years, at €%? 16. What is the amount of $5040, for 2 years, at 7%?

NOTE.-When there are years and months, and the months are an aliquot part of a year, multiply the interest for 1 year by the ycars and the months, reduced to the fraction of a year.

17. What is the interest of $119.48, for 2 yrs. 6 mo., at 7%? 18. What is the interest of $250.60, for 1 yr. 9 mo., at 6% ? 19. What is the interest of $956, for 5 yrs. 4 mo., at 9%? 20. What is the amount of $1575.20, for 3 yrs. 8 mo., at 7% ? 21. What is the amount of $5000, for 2 yrs. 3 mo., at 5%? 22. What is the interest of $1508.20, for 4 yrs. 2 mo., at 10%? 23. What is the interest of $75, for 6 yrs. 10 mo., at 121⁄2%? 24. What is the amount of $125, for 5 yrs. 6 mo., at 43%.

272. What is interest? What is the principal or base? What is rate? What is amount? What is the meaning of per annum ?—273. How is a year reckoned, in computing interest? How many days are reckoned in a month? What is legal interest? What is usury?

CASE II.

277. To find the interest on a given principal for any rate and time.

1. What is the interest of $1752.96, at 6 per cent., for 2 yrs. 4 mo. and 29 da. ?

ANALYSIS.-The interest for 1 year is the product of the pri cipal and rate. If the interest for 1 year be divided by 12, the quotient will be the interest for 1 month; if the interest for 1 month be divided by 30, the quotient will be the interest for 1 day.

The interest for 2 years is two times the interest for 1 year; tho interest for 4 months, 4 times the interest for 1 month; and the interest for 29 days, 29 times the interest for 1 day.

I. Find the interest for 1 year:

II. Divide this interest by 12, and the quotient will be the interest for 1 month:

III. Divide the interest for 1 month by 30, and the quotient will be the interest for 1 day:

IV. Multiply the interest for 1 year by the number of years, the interest for 1 month by the number of months, and the interest for 1 day by the number of days, and the sum of the products will be the required interest.

274. What are the general rates of legal interest?-275. How many parts are there in interest? What are they ?-276. How do you find the interest of any principal for one or more years?-277. How do you find the interest for any rate and time?

NOTE. This method of computing interest for days, is the one in general use. It supposes the month to contain 30 days, or the year 360 days; whereas, it actually contains 365 days.

12

2

To find the exact interest for 1 day, we must regard the month as containing 365 days = 30 days; and this is the number by which the interest for one month should be divided, in order to find the exact interest for one day. As the divisor, commonly used, is too small the interest found for 1 day, is a trifle too large. If entire accuracy is required, the interest for the days must be diminished by its 183 part =

part.

2D METHOD.

278. There is another rule resulting from the last analysis which is regarded as the best general method of computing interest.

Rule.

I. Find the interest for 1 year, and divide it by 12; the quotient will be the interest for 1 month:

II. Multiply the interest for 1 month by the time expressed in months and decimal parts of a month, and the product will be the required interest.

NOTE. Since a month is reckoned at 30 days, any number of days is reduced to decimals of a month by dividing the number of days by 3.

Examples.

1. What is the interest of $655, for 3 years 7 months and

2. What is the interest of $358.50, for 1 yr. 8 mo. 6 da., at 7% ? 3. What is the interest of $1461.75, for 4 yrs. 9 mo. 15 da., at 6 per cent.?

4. What is the interest of $1200, for 2 years 4 months and 12 days, at 74%?

5 What is the interest of $4500, for 9 mos. 20 da., at 5% ?

What is the interest of $156.25, for 10 mo. 18 da., at 8% ? 7. What is the interest of $640, for 3 yrs. 2 no. 9 da., at 61%? 8. What is the interest of $276.50, for 11 mo. 21 da., at 10%? 9. What is the amount of $378.42, for 1 yr. 5 mo. 3 da., at 7%? 10. What is the amount of $1250, for 7 mo. 21 da., at 10%? 11. What is the interest of $6500, for 2 mo. 10 da., at 94% ? 12. What is the interest of $70.50, for 10 years and 10 months, at 51 per cent.?

13. What is the amount of $45, for 12 years and 27 days, at 6 per cent.?

14. What will $100 amount to in 15 years and 6 months, if put at interest at 4 per cent.?

15. How much will $475.50 gain in 5 years 9 months and 24 days, at 8 per cent.?

16. What will be the interest of $4560, for 14 months and 19 days, at 7 per cent.?

17. What will $128.37 amount to in 10 months and 27 days, at 6 per cent.?

18. What is the interest of $264.52, for 2 years 8 months and 14 days, at 6 per cent.?

19. What is the amount of $76.50, for 1 year 9 months and 12 days, at 6 per cent.?

20. What will be the interest for 3 years 3 months and 15 days, of $241.60, at 7 per cent.?

21. What is the interest of $5600, for 30 days, at 7 per cent.?

278. What is the rule for the second method?