ANNUAL INTEREST. 310.* Annual Interest is the interest due at the end of each year, when a note is written "with interest annually." Each year's interest, not paid when due, draws simple interest until paid. This interest is sanctioned by the courts of some States, in the nature of damages for the detention and use of interest after it is due. 311.* To compute annual interest. 1. What is the interest due on a note of $800, interest payable yearly, on which no payments have been made, at the end of 3 years and 9 months? Int. of $48 for 2y. 9 mo. + 1y. 9mo. + 9mo., or for 5y. 3mo. = 15.12 Total interest, $195.12 Here, the interest of the principal for the time is $180, and for each year is $48. The first year's interest, after becoming due, remains unpaid 2 y. 9 mo., the second year's, 1 y. 9 mo., and the third year's 9 mo. The interest of $48 for 2 y. 9 mo. + 1 y. 9 mo. + 9 mo., is equal to the interest of $48 for 5 y. 3 mo., or $15.12. Hence, the total interest is $180+$15.12, or $195.12. RULE. Find the interest of the principal for the whole time; find the interest of one year's interest for the sum of the times each year's interest remains unpaid, and the sum of these interests will be the total interest. Examples. 2. William Norton has L. Dixon's note, dated June 1, 1864, for $500, with interest to be paid annually, at 6%; what was due June 1, 1867? Ans. $595.40. 3. What is the interest due on a note of $200, interest pay What is Annual Interest? Explain the operation. Repeat the Rule. able annually, on which no payments have been made, at the end of 2 years, 6 months, 3 days? Ans. $31.55 4. What was due July 1, 1867, on a note dated May 1, 1863, for $780, with interest payable annually, at 6 %? 5. What was due January 1, 1868, on a note dated July 1, 1865, for $1000, with interest payable annually, at 7 %? Ans. $1184.80. 312. PARTIAL PAYMENTS. Partial Payments are payments in part of a note, bond, or like obligation. The payments, being receipted for by writing upon the back of the obligation, are called INDORSEMENTS. 313. When settlements are made at the end of short periods, or within a year, and on notes for any time, in States where there are no prescribed methods of reckoning interest in case of partial payments, it is customary to compute by the MERCANTILE RULE. Find the amount of the principal from the time it began to draw interest, and the amount of each indorsement from the time it was made until settlement. Subtract the sum of the amounts of the payments from the amount of the principal, and the remainder will be the balance due. In mercantile accounts, the rule may be applied to each specified period for which they are allowed to run, so that a new principal may be formed at the end of every three, six, twelve months, etc., according to the custom of merchants in balancing their ledgers. This method has, even in application to notes, been sanctioned by the courts of some of the States. What are Partial Payments? What are called Indorsements? By what Rule is it customary to compute when settlements are made within a year? Repeat the Mercantile Rule. Examples. Chicago, January 1, 1863. (1.) $1728. For value received, I promise to pay Raymond, Morris, and Co., or order, on demand, one thousand seven hundred and twenty-eight dollars, with interest. [Stamp.] Rufus Ogden. INDORSEMENTS. March 1, 1863, $300; May 16, 1863, $150; September 1, 1863, $270; December 11, 1863, $135. For value received, we jointly and severally promise to pay Joseph Perry or order, on demand, seven hundred dollars, with interest. [Stamp.] REVIEW QUESTIONS. What is Interest? (288) The Rate of interest? (288) The Amount? (288) Usury? (289) 19* Jackson Fields. Edwin Reed. The Principal? (288, INDORSEMENTS. December 18, 1864, $164; June 24, 1865, $200; September 11, 1865, $120; July 5, 1866, $60. What was due on this note November 28, 1866? (3.) $500. Ans. $227.87+. Milwaukee, January 1, 1866. For value received, three months after date, I promise to pay to the order of Andrew Benson, five hundred dollars. [Stamp.] INDORSEMENT. January 1, 1867, $200. James Lockwood. What was due April 1, 1867, at 7% interest? Ans. $331.50. 314. The United States Courts have adopted the following, called the UNITED STATES RULE. Find the amount of the principal to the time of the first payment; if the payment equals or exceeds the interest, subtract it from the amount, and regard the remainder as a new principal. If any payment be less than the interest due, find the amount of the same principal up to the time when the sum of the payments shall first equal or exceed the interest due, and subtract the sum of the payments from the amount; the remainder regard as a new principal, with which proceed as before. (1.) $1000. Examples. Washington, January 1, 1866. For value received, I promise to pay Albert White, or order, one thousand dollars, on demand, with interest. [Stamp.] George W. Reves. INDORSEMENTS. April 1, 1866, $24; August 1, 1866, $4; December 1, 1866, $6; February 1, 1867, $60; July 1, 1867, $40. What will be due June 1, 1870 ? Ans. $1121.90. Repeat the United States Rule. Second pay't, Aug. 1, 1866, less than int. due, $4.00 For value received, we promise to pay Madison Wells, or order, on demand, six hundred twenty-five dollars, with interest. [Stamp.] Bancroft, Stetson, & Co. INDORSEMENTS. January 1, 1865, $200; Nov. 1, 1865, $20; January 1, 1866, $300. How much was there due May 1, 1866? Ans. $143.79+. REVIEW QUESTIONS. What is Simple Interest? (290) In computing ncerest, how is it customary to regard months and days? (293) What is cach day's interest in dealing with the United States Government? (293) |