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6. A note of $850, dated Jan. 3, 1876, and drawing interest at 6%, has the following indorsements:-Mar. 7, 1876, $30; May 9, 1876, $60.50; Aug. 9, 1876, $25. What was due Dec. 19, 1876?
9. On a debt of $1100 bearing interest at 6% from Feb. 6, 1876, the following payments were made:- March 28, 1876, $100; June 19, 1876, $350; Aug. 30, 1876, $400; Nov. 14, 1876, $50. What was due Jan. 1, 1877?
PRESENT WORTH AND DISCOUNT. The Present Worth of a debt payable at some future time without interest is that sum of money which, at legal interest for the given time, will amount to the debt.
Thus, the present worth of a debt of $106, due 1 year hence without interest, is $100; because $100 at 6% interest for 1 year will amount to $106.
True Discount is the difference between a debt bearing no interest and its present worth.
Commercial Discount is a deduction from the nominal price of an article, the face of a bill, &c., and is usually a certain percentage, without regard to time.
Bank Discount is interest paid in advance, and for three days more than the nominal time.
To find the present worth and true discount.
WRITTEN EXERCISES. 1. What is the present worth of $600, due 1 year hence, interest at 6% ?
Amount of $1 for 1 yr. at 6% = $1.06.
ANALYSIS.—The amount of $1 for. 1 yr. at 6% is $1.06; the present worth, therefore, of $1.06 due 1 yr. hence is $1, and the present worth of $600 will be as many dollars as 1.06 is contained times in 600, or $566.037. $600 - $566,037=$33.963 discount.
RULE. Divide the debt by the amount of one dollar for the given time and rate ; the quotient will be the present worth.
Subtract the present worth from the debt, and the remainder will be the discount.
2. What is the present worth of a legacy of $2000 payable in 18 months, interest at 6% ?
3. Find the discount on $1344 due 2 years hence, interest at 6%.
4. What is the present worth of $750 due in 1 yr. 1 mo. 25 da., interest at 7%?
5. Find the discount on $1280 due in 7 mo., interest at 6%.
6. What is the difference between the interest and the discount on $525 due 10 mo. hence, at 6% ?
7. I am offered $3000 cash for my house, or $3082.75 payable in 9 months without interest; how much shall I lose by accepting the latter proposition, money being worth 6% ?
8. Find the present worth of $1800 payable in three equal installments without interest, in 6, 9, and 15 months respectively, money being worth 8%.
9. I buy goods for $1150 cash and sell them for $1224 on a credit of 4 months; do I gain or lose, and how much, interest being at 6 %?
10. If I buy goods for $1200 on a credit of 4 months, and sell them for $1176.47 cash, do I gain or lose, and how much, interest being at 6% ?
BANKING. A Bank is an institution incorporated for the purpose of receiving deposits, lending money, or issuing bills, called bank-notes, for circulation as money.
Banks lend money on promissory notes made payable at a specified time. When a person has such a note discounted, he receives for it a sum equal to its face less the interest from the date of discount until its maturity.
When a bank discounts a note drawing interest, the discount is calculated on the amount of the note when due.
The Proceeds or Avails of a note is the amount received for it after being discounted, and is the face of the note less the bank discount.
Days of Grace are three additional days allowed for the payment of a note after the expiration of the time named therein.
A note is at Maturity and is legally due at the expiration of the days of grace.
The Term of Discount is the time from the date when the note is discounted until its maturity.
A Protest is a formal declaration made by a Notary Public, at the request of the payee or holder of a note, giving legal notice of its non-payment to the maker and the indorsers.
Note.— A protest for non-payment must be made upon the last of the three days of grace, unless that day should be Sunday or a legal holiday, in which case the protest must be on the day previous.
In discounting a note, banks include the day on which it is discounted and the day on which it matures. For example, a note drawn October 3, 1876, for 3 months, and discounted November 3, 1876, matures January 6, 1877, and the term of discount is from November 3 to January 6, both inclusive, or 65 days.
CASE I. The face of a note, time, and rate, being given, to
find the proceeds.
WRITTEN EXERCISES. 1. Find the proceeds of a note of $450, at 90 days, discounted at the Philadelphia Bank.
ANALYSIS.—As bank discount 1350
is simple interest at the legal 4050
rate for the time specified + 3
days of grace, we find the in6)41850
terest of $450 for 93 days= $6.975 Bank Discount. $6.98, which is the bank dis
count. Subtracting this from $450
the face of the note gives us 6.975
$443.02 as the proceeds. $443.025 Proceeds.
RULE. Find the interest on the face of the note for three days more than the time specified, and the result will be the bank discount.
Subtract the discount from the face of the note or sum discounted, and the remainder will be the proceeds.
Find the proceeds of each of the following notes :-
7. Bought a lot of sugar for $320 cash, and sold it immediately, receiving in payment a note for $400 at 60 days, which I had discounted in bank at 6%; what did I gain in the transaction?
8. Find the maturity, term of discount, and proceeds of the following note:$450.
Philadelphia, Oct. 3, 1876. Three months after date I promise to pay to the order of Joseph Wood, three hundred dollars, at the People's Bank, without defalcation. Value received.
GEORGE MORTON. Discounted Nov. 3.
Find the proceeds of each of the following:
9. Note for $900, dated July 5, at 90 days; discounted Aug. 14, at 6%.
10. Note for $1325.25, dated July 22, at 60 days; discounted Aug. 1, at 7%.
11. Note for $4250.75, dated Sept. 29, at 3 months; discounted Oct. 3, at 9%.
12. Note for $1500, dated Sept. 1, at 4 months; discounted Sept. 25, at 6%.
13. Note for $365.15, dated May 3, at 90 days; discounted July 1, at 12%.
14. Note for $2000, dated Jan. 5, at 30 days; discounted Jan. 8, at 10%.
15. Note for $5000 with interest at 6%, dated June 4, at 90 days; discounted June 8, at 9%.
16. Note for $1776.95, dated Feb. 1, at 3 months; discounted Feb. 15, at 7%.
17. Note for $1900.05, dated Feb. 27, at 90 days; discounted Feb. 28, at 8%.
18. Note for $1000 with interest at 7%, dated March 8, at 60 days; discounted March 15, at 7%.
19. Note for $2500, dated June 1, at 90 days; discounted June 30, at 6%.