250. The True Discount is the difference between the whole debt and the present value.

NOTE. The present value represents the principal, the discount represents the interest, and the debt represents the amount.

ORAL EXERCISE.

1. What is the present worth of $163.50, due 1 yr. 6 mo. hence, at 6% ?

SOLUTION 1.-The interest of $1 for 1 yr. 6 mo., at 6%, is 9 cts., and the amount of $1 for the same time and at the same rate per cent. is $1.09; hence, the present worth of $163.50 is as many dollars as $1.09 is contained times in $163.50, or $150.

SOLUTION 2.-Since the amount of $1 for 1 yr. 6 mo., at 6%, is $1.09, 10% of the present worth or principal equals the amount. If $163.50 is 10% of the present worth, of the present worth is of $163.50, or $1.50, and 108, or the present worth is 100 times $1.50, or $150.

2. What is the present worth of $240, due 3 yr. 4 mo. hence, at 6% ?

3. What is the present worth of $150, due 4 yr. 2 mo. hence, at 6% ?

4. What is the discount on $228, due 2 yr. hence, at 7% ? 5. What is the discount on $92, due 3 yr. hence, at 5% ? 6. A note for $300 bears interest at 6%, and is due 5 yr. hence what is the discount?

7. A bill of goods was bought amounting to $1575, due 10 mo. hence, interest 6%; the seller offers to take $1490 cash will the buyer make or lose by accepting the seller's offer?

WRITTEN PROBLEMS.

1. What is the present value of $1302, due 1 yr. 5 mo. hence, interest at 6% ?

SOLUTION.

Int. of $1 for 1 yr. 5 mo., at 6% = 8 cts.
Amt. of $1

$1302-$1.08=1200.

=$1.08

ANALYSIS.

Ans. $1200.

The interest of

$1 for the given time and at the given rate per cent. is 8 cts.; and the amount of

$1 for the same time and at the same rate per cent. is $1.08; hence, the present worth of $1.083 is $1, and the present worth of $1302 is as many dollars as $1.08 is contained times in $1302, or $1200.

NOTE.-Let the pupil derive a rule.

2. What must be paid now to cancel a debt of $994.50, due 1 yr. 9 mo. hence, at 6% ?

Ans. $900. 3. What is the true discount on $800, due 2 yr. 5 mo. hence, at 6% ? Ans. $101.31. 4. What is the present value of a debt of $1000, due 2 yr. 6 mo. 18 d. hence, at 7% ? Ans. $848.54. 5. What is the present value of a note for $750, due 1 yr. 5 mo. 24 d. hence, at 6% ? Ans. $688.71.

6. Bought a store for $15000, and sold it again for $20000, to be paid cash, and the remainder in 2 yr.: what did I make, money being worth 6% ? Ans. $3392.86.

7. Bought two lots for $2500, on 3 years' time, without interest: what is the cash value, money being worth 7% ?

Ans. $2066.11. 8. A merchant buys $900 worth of goods at 25% discount, and sells them at regular retail price on 9 months' credit: what is his cash gain, money being worth 6% ?

Ans. $186.24.

9. Which is the more profitable, to buy lumber at $25 a thousand on 9 months' credit, or at $24.50 on 6 months'credit, money being worth 6% ? Ans. The latter-13 cts. per M.

10. Mr. Wallace bought a farm for $12500, paying $2500 cash, and the remainder in two equal yearly payments: what was the cash value, money being at 6%? Ans. $11681.27.

11. Bought a lot for $600, of which I paid $50 cash, $150 in 9 months, $200 in 1 yr. 9 mo., and $200 in 2 yr. 9 mo., interest at 8% what was the cash value, money being worth 6%? Ans. $617.92.

:

SECTION XVIII.

BANKING AND BANK DISCOUNT.

251. A Bank is a corporation chartered by law for receiving deposits, loaning money and issuing notes or bills to circulate as money.

252. A Deposit is money or its equivalent placed in the care of a bank.

253. A Check is a written order or request for money, addressed to a bank, by a person having a deposit in that bank. The following is the usual form of a check:

No.......

PHILADELPHIA, Pa., July 6, 1876. First National Bank of Philadelphia, Pa.

254. Bank Discount is the allowance made to a bank for the payment of a note before it matures.

255. Bank Discount is the interest on the face of the note for the time it has to run, including three days of grace.

256. The proceeds of a note is the sum received when the note is discounted, and is the remainder after subtracting the discount from the face.

NOTE 1.-Bank discount may be computed by any of the methods of computing interest, but the method for days seems to be the shortest and simplest.

2. Bankers in computing discount add four days of grace. They claim that the party receiving the proceeds can, by having the discount made early in the day and paying the note late, practically have the use of the money both on the day of discount and also on the day of payment, thus making four extra days.

CASE I.

To find the Bank Discount or the Proceeds.

WRITTEN PROBLEMS.

1. What is the bank discount on a note of $650 for 60 d., at

For explanation see Method of Interest by Days, page 226.

2. What is the bank discount on a note of $1320 for 90 d.,

1. At 6% add the days of grace; then multiply the number of dollars by the number of days, and divide by 60; the result is the bank discount in cents.

2. At any other per cent. than 6 add the days of grace; then multiply the number of dollars, the number of days and the rate together, and divide by 60 times 6, or 360; the result, as before, is the bank discount in cents.

The following problems are solved by reckoning either 3 or 4 days of grace, the first answer being for three days of grace, the second for four. The date of maturity is marked at the bottom; thus, Dec. 13/16.

3. What is the bank discount on a note for $726 for 30 $3.99. Ans. $4.11.

days, at 6% ?

4. Find the proceeds of a note of $180 due in 60 days, at

7%.

Ans.

$177.79. $177.76.

5. What is the discount on a note of $420.50 for 90 days,

at 8% ?

Ans.

$8.69.

88.78.

6. What are the discount and the proceeds of a note of

$75.66 for 60 days, at 10% ?

Ans. Dis.,

$1.32
$1.34 proceeds,

$74.34.

$74.32.

Find the discount, proceeds and date of maturity of the following notes:

00

$132210

(7.)

READING, Pa., Jan. 20, 1876.

Sixty days after date, I promise to pay to the order of Henry Bushong, Thirteen Hundred and Twenty-two Dollars. Without defalcation, value received. J. H. JACOBS.

$173,2.

PITTSBURG, Pa., Apr. 26, 1875. Ninety days after date, I promise to pay John Morrow, or order, at the First National Bank of Pittsburg, One Hundred and Seventy-three Dollars. Without defalcation, value received. BENJAMIN FRANKLIN.

24 100

Thirty days after date, I promise to pay Frank Greene, or order, at the Trenton National Bank, Six Hundred and Thirtytwo 40% Dollars. Without defalcation, value received.

100

ROCHESTER, N. Y., Apr. 3, 1875.

Sixty days after date, I promise to pay to W. A. Lander, or order, at the Rochester City Bank, One Hundred and Forty 75 Dollars, with interest, at 7%. Without defalcation, value received. W. W. RANKIN.

Discounted May 3, 1875, at 6%. Ans. Due, June 2/5. Dis.,

78 cts.

$141.61.

81 cts.

; proceeds,

$141.58.