EXERCISE 126 1. A man borrows from a loan association $3000 at 8% interest. If he pays $100 at the end of every 3 mo. for 1 yr., find the amount due at the end of the year. 2. A man borrows from a building and loan company $2000 at 8% interest. He pays in monthly installments of $50 each. How much does he owe at the end of 6 mo. ? 3. If you borrow $1800 at 6% interest and pay annually $600, how much do you owe at the end of 3 yr.? 4. If you borrow $1500 at 8% interest and pay semiannually $300, how much do you owe at the end of 2 yr.? 5. If $2400 is borrowed at 8% interest, and paid in quarterly installments of $150 each, how much is due at the end of two years ? 6. A man borrows $3000 at 8% interest, and pays in semiannual installments of $500 each. How much is due at the end of three years? pays 7. A man borrows $1800 at 6%, and $400 per year. How much is due at the end of five years? 8. If I borrow $2500 at 5% interest, and pay $500 a year, how much do I owe at the end of five years? 9. How much is due at the end of two years on a loan of $2500 at 5% interest when paid in semiannual installments of $600 each? 10. A note dated Jan. 15, 1904, for $4000 had the following indorsements: July 10, 1904, $700; Dec. 24, 1904, $600; June 18, 1905, $800; Nov. 13, 1905, $500; March 17, 1906, $900; Aug. 10, 1906, $400; Feb. 12, 1907, $400. How much was due May 28, 1907, at 6%? THE MERCHANTS' RULE The Merchants' Rule for computing interest on partial payments is used when settlement is made within one year from the date of the note. The rule is as follows: I. Compute the amount of the face of the note until the date of settlement. II. Compute the amount of each indorsement from its date until the date of settlement, and add these amounts. III. Subtract the sum of the amounts of the indorsements from the amount of the face of the note. The remainder will be the amount due on the date of settlement. Example. A note for $500, with interest at 8%, dated Jan. 10, 1902, had the following indorsements: April 1, 1902, $100; May 10, 1902, $200; July 1, 1902, $100. Find the amount due Nov. 1, 1902. SOLUTION. From Jan. 10 to Nov. 1 is 9 mo. 21 da. From May 10 to Nov. 1 is 5 mo. 21 da. 1. A note for $500, with interest at 6%, dated Jan. 2, 1902, had the following indorsements: March 2, 1902, $100; May 5, 1902, $150; July 10, 1902, $200. Find the amount due Nov. 1, 1902. 2. A note for $600, with interest at 8%, dated Feb. 1, 1902, was indorsed as follows: March 11, 1902, $200; May 15, 1902, $100; July 3, 1902, $100. Find the balance due Aug. 1, 1902. 3. A note for $800, with interest at 8%, dated Feb. 10, 1902, was indorsed as follows; March 15, 1902, $200; April 10, 1902, $100; June 3, 1902, $200. Find the amount due Nov. 1, 1902. 4. A borrows $1500 on Jan. 1, 1907, at 6% interest, and pays $450 each quarter. How much does he owe when three payments are made? EXCHANGE The written order of one party to another, requesting the payment of a specified sum of money, is called a draft. The parties to a draft are drawer, drawee, and payee. The following are forms of drafts: A time draft payable after sight matures as a promissory note. Bank drafts form one of the most important mediums of exchange. If a merchant owes money in New York, Chicago, or in any other place, he can always purchase a draft from his home bank, and by transmitting this through the mails settle his indebtedness. Hutchings, Sealy & Co., Bankers, Pay to the order of Franees Aewman. The price of exchange is a matter of supply and demand. If, for instance, the Galveston banks freely offer New York or Chicago exchange, a purchaser will very probably get it for less than its face value. If exchange is scarce, its price is high. When exchange costs more than its face value, it is said to be at a premium; when it costs less than its face value, it is said to be at a discount. Exchange is at par when the cost of a draft is its face value. Exchange is always quoted as a rate per cent, or as so many dollars on a $1000. The exchange is always reckoned on the face value of the draft. Thus % premium, or $1.25 premium, means that the cost of a draft for $100 is $100, and the cost of a draft for $1000 is $1001.25. The rate of exchange is generally a fraction of 1%. Express companies charge for money orders to any part of this country or Canada not over 30 for $100. It is reasonable to assume that a person will not pay much more than this rate for exchange. EXERCISE 128 1. What is the cost of exchange on a sight draft for $400 at% premium? 2. What is the cost of exchange on a sight draft for $300 at % premium? 3. Find the cost of a draft on New York for $200 at % premium. 4. Find the cost of a demand draft for $500 at 1% premium. 5. Find the cost of a sight draft for $600 at 1% premium. |