EXERCISE 80

REVIEW PROBLEMS

1. Find the amount of $500, compounded semiannually, at the rate of 4% a year, for 5 years.

2. A man deposits $750 in a savings bank on July 1, 1910. His further deposits are as follows: Aug. 1, 1910, $300; Sept. 15, 1910, $250; Dec. 31, 1910, $1000; June 15, 1911, $500. He draws out as follows: Oct. 12, 1910, $400; June 20, 1911, $375; Aug. 2, 1911, $200. The savings bank pays 1% every three months on the smallest balance for the preceding quarter, on Jan. 1, Apr. 1, July 1, and Oct. 1. Find the balance on Jan. 1, 1912.

3. Make out a deposit slip for the following deposits, naming some bank in your vicinity: bills, $575; gold, $35; silver, $72.25; checks, $48.25, $72.50, $61.30, $227.52, and $86.95. If your balance was $326.42 before, what was it after the deposit?

4. A merchant's balance on the first of the month was $1725.60. He has since deposited $37.50, $296.75, $21.30, $572.32, and $217.65. He has given checks for $128.92, $27.36, $18.92, $78.76, and $273.96. How much is his present balance?

5. Make out a 90-day note for $1250, dated to-day, payable to R. P. Foster, or order, at some bank in your vicinity. Discount it at 6%. If with the proceeds you buy 10 shares of stock when quoted at 1083, how much money will you have left?

6. Which is the greater, the proceeds of a note for $750 for one year, drawing interest at 6%, and discounted on the day of its date at 5%, or the amount of a note for $700 for one year at 6%? How much greater?

EXERCISE 81

PROBLEMS WITHOUT NUMBERS

1. How is the interest due on the first of the year on a savings-bank account ascertained?

2. Which pays the better interest, if the money is left undisturbed for five years, a 4% promissory note or a såvings-bank deposit at 4%? Why?

3. How do you fill out a deposit slip? After entering the items what operation do you perform? How do you make sure of the result?

4. If you know a man's balance in a bank a week ago and his deposits and checks since, how do you proceed to find his balance now?

5. How do you find the discount on a promissory note? How do you find the proceeds?

6. If a note drawing a certain rate of interest is discounted on the day it is made, at the same rate, are the proceeds greater than the face, or equal to it, or less? Why is this?

7. How can a manufacturer discount a claim against a purchaser, the claim not being yet due? How is the discount found?

8. If you know the proceeds and rate of discount, how do you find the face of a note?

9. If you know the face of a note and the proceeds, how do you find the discount? the rate of discount?

10. If a dealer buys some produce and agrees to pay for it in 90 days, with interest at 6%, and the seller takes a note and at once discounts it at 5%, will he receive more than the selling price, or the same amount, or less? Why?

CHAPTER VII

EXCHANGE

158. Paying Bills at a Distance. If a man owes money at a distance, he may pay it in any one of several ways:

(1) He

may send or carry the money.

(2) He may send a money order.

(3) He may send his check.

(4) He may send a bank draft.

(5) He may wait until the one whom he owes draws upon him, as mentioned in § 156.

159. Exchange. The payment of money by means of checks, money orders, or drafts is called exchange.

160. Paying by Money Order. A man who owes money at a distance may purchase a postal money order at a post office, an express money order at an express office, or a telegraphic money order at a telegraph office.

The cost of postal money orders is as follows: For sums not exceeding $2.50, 3 cents; over $2.50 to $5, 5 cents; over $5 to $10, 8 cents; over $10 to $20, 10 cents; over $20 to $30, 12 cents; over $30 to $40, 15 cents; over $40 to $50, 18 cents; over $50 to $60, 20 cents; over $60 to $75, 25 cents; over $75 to $100, 30 cents. Express money orders cost about the same. Postal money order rates to foreign countries vary with the country and the amount, from 8 cents for sums not exceeding $10 to some countries, to $1 for sums over $90, but not exceeding $100, to other countries.

The rate for telegraphic money orders is double the cost of a tenword message, plus 25 cents if the sum does not exceed $25, and plus 1% of the amount of the order for larger sums.

161. Paying by Check. Usually local bills are paid by check. A check sent to pay a bill at a distance is deposited by the payee in the bank where he keeps his account, and this bank sends it to the debtor's bank for collection, often making a slight charge for the trouble.

In some cities the banks agree to charge for collecting all out-oftown checks. This costs the payee of the check from ten cents upward, according to the amount involved.

A bank may guarantee that a check is good. This is done by the cashier writing the word "Certified" across the face, with the date and his signature.

13. A man owing $250 sent his check in payment. The creditor deposited the check and the bank charged him 0.1% for collecting. What was the net amount received by the creditor?

14. A manufacturer received checks for $1200, $650, $2250, and $1750. His bank charged him 0.1% for collecting. How much in all did he pay for the collecting of the four checks?

15. A man wishes to send a check to a friend for an amount such that after the bank has deducted 0.1% for collecting there will remain exactly $3246.75. What shall he make the face of the check?

16. A man deposited a check for $1500 in a bank, and the net proceeds after the bank had deducted its charge for collecting was $1497. What was the rate that the bank charged for collecting?

162. Bank Drafts. A check drawn by one bank on another is called a bank draft, or simply a draft.

Banks usually charge from 0.1% to 1% on the face of a draft to pay for their trouble and expense.

No. 2796

FIRST NATIONAL BANK OF SALEM

SALEM, OREGON, April 16, 19/2

If Robert Stevens of Salem, Oregon, owed Tiffany & Co. of New York $95.50, he might purchase a draft like the above and indorse it : Pay to the order of Tiffany & Co., New York

Robert Stevens

He would then send the draft to Tiffany & Co., who would indorse it and deposit it in their bank for collection.

If Robert Stevens had an account at the First National Bank of Salem, he might not be charged any exchange. Otherwise he would probably be charged about 0.1% premium, or ten cents in this case.

Sometimes the premiums on drafts are quoted at a number of cents per thousand dollars.

EXERCISE 83

Find the cost of drafts for the following amounts at the premiums stated:

1. $2500, 0.1%.

4. $4800, 0.2%.

2. $3750, 0.1%. 3. $4850, 0.1%.

5. $5600, 0.2%.
6. $250, 1%.

7. $750, %. 8. $640, 1%. 9. $1280, 1%.