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5. $600.

Kansas City, April 1, 1884. On demand, I promise to pay Warren Grafton, or order, six hundred dollars, with interest at 6%, value received.

Hiram H. Watkins. Indorsements: July 16, 1884, $63,20 ; Oct. 16, 1884, $58.05; Dec. 30, 1884, $154.99; May 17, 1885, $9; September 29, 1885, $9 : what was due January 1, 1886 ?

6. Illustrate Partial Payments by an original problem.

Notes and interest accounts payable within a year, are generally settled by the

MERCHANTS' RULE. ART. 346.—Find the amount of the principal and of each payment to the time of settlement.

From the amount of the principal, subtract the amount of the payments, and the remainder will be the amount due.

NOTE.-Interest under the Merchants' Rule is based on 365 days to the year.

7. A note of $500, dated June 1, 1885, had three indorsements : Aug. 1, $120 ; Oct. 1, $100; Nov. 16, $25 : what was due Dec. 28, 1885, interest at 6% ?

Process.

Amount of $500, from June 1 to Dec. 28, 210 days....... $517.26
Amount of $120, Aug. 1 to Dec. 28, 149 days.. $122.94
Amount $100, from Oct. 1 to Dec. 28, 88 days. 101.45
Amount $25, from Nov. 16 to Dec. 28, 42 days..... 25.17

249.56

Balance due.

$267.70

8. A note of $600, dated May 1, 1885, and drawing interest at 7%, was indorsed as follows: June 20, $75 ; Aug. 1, $100 ; Oct. 5, $110 : what was due Feb. 1, 1886 ?

9. A note given for $1,000, dated February 1, 1885, bore the following indorsements: March 1, $200 ; May 10,

$100; July 1, $150; Oct. 15, $40 : what was due Jan. 1, 1886, interest at 6% ?

10. Illustrate the Merchants' Rule for Partial Payments by an original problem.

Discount and Present Worth. ART. 347.—Discount is a deduction made for the payment of a debt before it is due.

ART. 348.-The Present Worth of a debt is the debt less the discount.

ART. 349.—The True Present Worth of a debt, due at a future time without interest, is a sum which, if placed at legal interest, will amount to the debt at the time it becomes due.

ART. 350.—The True Discount is the debt less the true present worth.

as

WRITTEN EXERCISES. 1. Find the true present worth and discount of $330, payable in 1 year and 8 months, at 6%.

Analysis.Since Process.

$1.10 is the amount $330 = $1.10 = $300, the present worth. of $1, at interest $330 $300 $30, the true discount.

for 1 year and 8 Proof.—$300 x.10 = $30, the interest of months at 6%, it $300, for 1 year and 8 months, at 6%.

will require

many times $1 as $1.10 is contained times in $330, to amount to $330 in the same time and at the same rate.

ART, 351.-Rule for finding the present worth and the true discount of a debt, payable at a future time.Divide the debt by the amount of one dollar for the given time at the given rate, and the quotient is the present worth.

The difference between the present worth and the debt is the true discount.

Find the present worth and true discount of 2. $394.40 at 5%, due in 3 years 2 months 12 days. 3. $428.75 at 7%, due in 1 year 6 months. 4. $1,100 at 8%, due in 2 years 9 months. 5. $2,000, due in 93 days, at 6%.

6. Which is the more advantageous for me to buymolasses at $24 a hogshead cash, or for $25 on 6 months' credit, money being worth 6% ?

7. Which is worth more, and how much—$500 due in 12 months, or $485 cash, money being worth 5% ?

8. Mr. Burton bought a bill of goods amounting to $850 on 8 months' credit, but accepted the merchant's offer of 5% discount for cash. If money is worth 6%, how much would Mr. Burton gain or lose by accepting the proposal ?

9. I paid $1,200 cash for a horse, and sold it to Mr. Work for $1,300, payable in 1 year. If Mr. Work discounted his own note for that sum at 8%, what was my profit ?

10. Mr. Barron bought a bill of goods amounting to $1,000, of which $600 was payable in 3 months and $400 in 6 months. If he decided to pay at once, how much was the bill, discount for cash being at the rate of 6% per annum ?

11. I held two notes against Mr. Wilbur; one for $450, dated January 1, 1886, due in 4 months, and the other for $680, dated March 1, 1886, due in 1 year. Mr. Wilbur called on me April 1, 1886, and offered to purchase both notes. How much did I receive for them, if they were discounted at % a month ?

12. Illustrate True Discount by an original problem. NOTE.-It is usual in business transactions for the seller to deduct a certain per cent. for cash. A payment made within 30 days after purchase is considered cash ; " spot cash” is payment when the goods are received and the invoice is found correct.

Bank Discount. When a person wishes to borrow money from a bank, 'he submits his note, indorsed by some responsible party. The note is payable at a certain time after date. When discounted at a bank, three days of grace in most States are added to the time it has to run, and the interest on the face of the note for that period is deducted by the bank. The remainder is paid, or is placed to the credit of the one in whose favor the note is drawn.

ART. 352.-Bank Discount is interest on the face of a note, deducted in advance, and reckoned from the date of discount to the date of payment including both days.

ART. 353.—Days of Grace are the three days added to the time named in the note.

ART. 354.–The Proceeds of a Note is the face less the discount.

ART. 355.—The Term of Discount is the time which the note has to run after being discounted.

ART. 356.—A Protest is a legal notice of the nonpayment of a note when due, and is made by a notarypublic to the indorser or indorsers of a note.

When a note bearing interest is discounted by a bank, the sum discounted is the amount of the note at maturity.

ART. 357.-To find the Bank Discount and the Pro

ceeds of a Note.

WRITTEN EXERCISES. 1. What are the proceeds and bank discount on a note of $1,250, payable in 91 days, 3 days’ grace being allowed, and the discount being at 5% ?

Process. The interest on $1,250, for 94 days, at 5%, is $16.31, which is the bank discount, the proceeds being $1,250 – $16.31 = $1,233.69.

ART. 358.-Rule for finding the Bank Discount and the Proceeds of a Note.-Compute the interest on the face of the note for the time it has to run. This will give the discount, which subtracted from the face of the note leaves the proceeds.

2. Find the proceeds of a note of $840, discounted for 85 days at 5%.

3. What is the discount on a note of $150, discounted 93 days before due, at 7% ?

4. Find the discount and the proceeds of a note of $280, discounted at 6%, 75 days before due. 5. $550.

St. Louis, Jan. 10, 1886. Ninety days after date, I promise to pay to the order of W. S. Yard, five hundred fifty dollars, at the First National Bank, value received. George W. Ellis.

Discounted at 6%, January 10 : find the proceeds.
6.
$450.

Detroit, October 13, 1885. Three months after date, I promise to pay A. R. Bowdoin & Co., or order, four hundred fifty dollars, value received.

Edwin 0. Chapman. Discounted at 6%, Oct. 13 : find the proceeds. 7. $390.

New Orleans, December 20, 1885. Sixty days after date I promise to pay G. C. Meigs & Brother, three hundred ninety dollars, at the First National Bank, value received.

Wilmot E. Ellis. Discounted Dec. 20, at 5%: what is the discount? 8. $870.

New York, January 15, 1886. Thirty days after date I promise to pay Frederic B. Schell, or order, at the Park Bank, eight hundred seventy dollars, value received.

Edwd. B. Bensell. Discounted at 6%, Jan. 15 : what is the discount ?

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