INTEREST 1. Mr. Johnston pays the liveryman $6 for the use of a horse and buggy for two days. What does he get in exchange for the $6? 2. Mr. Daniels pays $6 for the right to pasture his cow in a field for two months. What does he get in exchange for the $6? 3. Mr. Watson pays $6 for the use of $100 for one year. What does he get in exchange for the $6? 4. In the first two examples money is paid for the use of something that is not money. For what does Mr. Watson pay the money in the last example? Interest is compensation for the use of money. Interest corresponds to the percentage in percentage. 5. How much does Mr. Watson pay for the use of the money? What is the $6 called? 6. On what is the interest reckoned? The $100 is called the principal. The principal is the sum on which the interest is paid. The principal corresponds to the base in percentage. The rate of interest is a certain number of hundredths of the principal paid for the use of the principal for one year. Time is always a factor in interest. Interest, then, is the product of three factors: principal, rate, and time. The amount is the sum of the principal and the interest. Interest for Years and Months 1. What part of a year are 6 months? 4 months? 3 months? 2 months? 1 month? 2. If the interest for a year is $100, what should it be for 6 months? for 4 months? for 3 months? for 2 months? for 1 month? Written Work 1. What is the interest on $200 for 21 years at 6% ? $200 principal .06 rate $12.00 interest for one year 212 $30.00 interest for 2 years The interest for 1 year is .06 of the principal, or $12. The interest for 21 years is 21 × $12, or $30. Multiply the principal by the rate and the product by the number of years. The year is usually considered as 360 days, that is, 12 months of 30 days each. Interest for Years, Months, and Days 1. What part of a month (30 days) are 15 days? 12 days? 20 days? 3 days? what part is 1 day? 2. If the interest for 1 year is $360, what is the interest for 1 month? If the interest for 1 month is $30, what is the interest for 1 day? for 15 days? for 12 days? Written Work 1. Find the amount of $200 at 6% interest for 2 yr. 7 mo. 12 da. a. What is the first step in the work? the second step? b. How do we find the interest for 1 month? for 7 months? for 12 days? c. What new term is introduced in interest? For what length of time is rate of interest always considered? Find the interest and amount of : 2. $300 for 3 yr. 6 mo. at 6%. 8. $16 for 8 mo. at 6%. 9. $75 for 8 mo. at 6 %. 10. $420 for 10 mo. at 10 %. 11. $40.50 for 1 yr. 1 mo. at 6 %. 12. $300.40 for 5 mo. at 7 %. 13. $100 for 7 mo. at 7 %. 14. $500 for 11 mo. at 6 %. 15. $1000 for 1 mo. at 6 %. Find the interest and amount of: 17. $250 at 8% for 3 yr. 5 mo. 20 da. 24. $634.50 at 8 % for 11 mo. 12 da. 25. Henry Boydson borrows $275 Sept. 1, 1906, at 6% interest, and settles the note Jan. 1, 1908. Find the amount of the note at settlement. The one dollar six per cent method of finding interest. of of $.06 or 1. ==$.0001. 60 Since the interest on 1 dollar for 1 month is 1 and for 1 day mill, change the years and months to months. The interest on each dollar will be as many cents as there are months and as many mills as there are days. a number equal to the number of dollars. Multiply the sum by The interest at any other rate may be found as follows: Write the interest on 1 dollar at 6% for: 2. 12 mo. 3. 8 mo. 4. 16 mo. 5. 8 mo. 18 da. 1. Find the interest and amount of $300 for 1 year 10 months 19 days at 6%; at 8%. $33.95 int. + $300 prin. = $333.95, amount. At 8% the interest will be $33.95 + († of $33.95), or $45.27, and the amount $345.27. |