Exact Interest.

314. In all the foregoing calculations 30 days have been taken for one month, and 360 days for one year. According to this method the interest on $6000 for 30 days at 6% would be $30; but if the period of 30 days were reckoned as only 30/365 of a year, the intcrest would be $29.52. The latter is called Accurate or Exact Interest.

315. Accurate or Exact Interest is interest for the exact time in days, the days being reckoned as 365ths of a year.

The United States Government pays exact interest.

316. To obtain accurate or exact interest for any number of days, we find the exact time in days, and take as many 365ths of a year's interest as there are days in the given time.

Example.-1. $350 is at interest from January 16 to March 29, 1880. What is the accurate interest?

Common Business Method.

317. Bankers and most other business men, in computing interest for short periods of time, usually take the exact number of days as above, but reckon each day as 360 of a year.

Days of Grace.—Formerly granted as a favor, the custom of allowing three days beyond the time agreed upon for the payment of a debt has grown into a very general law. They are, however, of no advantage to the debtor, inasmuch as the interest continues up to the time of payment. In States where they are required, suit can not be brought to enforce the payment of a debt till the expiration of the days of grace.

Note. In the following problems, add days of grace to the given time.

Example.-1. Find the interest of $150 from April 27 to June 26, 1885, at 9%.

Bank Discount.

Illustration. If a merchant desires to obtain a loan for any short period of time, say about $1000, for 60 days, he may take his own note, or the note of another party, for $1000, to a bank, and if the note is properly indorsed or its payment is otherwise secured, the bank will take it, pay him $1000 less the interest for 63 days, and collect the $1000 when it becomes due.

The interest on $1000 for 60 days + 3 days of grace, computed by any of the preceding methods, is $10.50. $1000 - $10.50 $989.50 the sum which the

merchant will receive on the note.

=

=

318. The Avails or Proceeds of a note is the sum that the bank pays upon it after deducting the interest on the face or amount of the note.

319. The sum deducted for the payment of proceeds before a note becomes due is called Bank Discount.

320. A note is said to be payable at the promised time of payment. Its date of maturity is three days later, the last day of grace. It then becomes legally due.

If a note is not paid at maturity, a written notice of the failure should be sent on the last day of grace to the indorser or indorsers, otherwise they can not be held for its payment. Such notice is called a protest, and should be made out by a Notary Public.

321. The dates showing when a note is payable and the date of maturity are written thus: Aug. 5%.

322. If the third day of grace falls on a Sunday or on a legal holiday, the note is due on the last preceding business day.

SLATE EXERCISES.

Example.-1. What was the bank discount and what were the proceeds of a note of $645, dated July 22, payable Sept. 20, and discounted at 6% on the day the note was drawn?

Find the bank discount and proceeds of a note for

2. $440, payable in 90 d., discounted at 6% on the day drawn.

9%

5. $140.25, "

66

412%

66

6. $970, dated Feb. 9, 1884, payable in 60 days, and discounted at 6% on March 13, 1884. (Due April 9/12. Reckon discount from March 18th to April 12th = 30 d.)

7. $638, dated Jan. 21, 1880, payable in 3 mo., discounted at 8% on Feb. 4, 1880. (Due April 21/24. Discounted for 80 d.)

8. $1235, dated May 10, 1881, payable in 4 mo. with interest at 6%, discounted at 6% on June 5, 1881. (Due Sept. 10/13, with interest for 4 mo. 3 d. The amount is the sum to be discounted.)

9. $6040, dated July 12, 1885, payable in 90 d. with interest at 42%, discounted at 10% on Aug. 4, 1885. (Due Oct. 10/13 Reckon interest for 93 d. at 4 1/2% and discount from Aug. 4th to Oct. 13th.)

10. $12008, dated May 12, 1870, payable in 9 mo. with interest at 8%; indorsed $5000, Aug. 12, 1870, discounted Nov. 12, 1870. (Due Feb. 12/16.)

Find interest on $12008 for 3 mo. at 8%; apply the partial payment, $5000, and find new principal; reckon amount of this new principal for 6 mo. 3 d.; this amount reckon discount from Nov. 12, 1870, to Feb. 15, 1871 = 95 d.

on

11. Find the face of a note, payable in 57 d., that will yield $792 proceeds when discounted at 6%.

Analysis. Since a face of $1 would yield $.99 proceeds, to yield $792 proceeds will require as many dollars face as $.99 are contained times in $792= 800 times $1 = = $800.

12. Find the face of a note, payable in 30 days, that will yield $477.36 proceeds when discounted at 6%.

13. I bought a bill of goods for $864 on 4 mo. credit, but, being offered 5% off for cash, I borrowed the money at a bank by having my note, payable in 117 days, discounted at 6%, and paid the bill. What was the face of the note, and how much did I gain?

Promissory Notes.

323. A Promissory Note, or simply a Note, is a written promise to pay a specified sum of money on demand or at a certain time to some person named in the note.

324. The sum promised to be paid is the Face of the note.

325. The signer is called the Maker or Drawer.

326. The person to whom it is payable is the Payee. 327. The owner of the note is called the Holder.

The following is a simple form of a promissory note :

$50.75.

New York, June 15, 1880.

Three months after date I promise to pay | JOHN JONES' fifty 75/100 dollars,3 for value received.

AMOS WILSON.

(Who is the maker of the above note? Who the payee? What is its face? What is its date?)

Notes.-1. Time. a. The time of a note should be written in words, and may be expressed in days, months, or years, or the date on which it is to be paid may be specifically stated. Thus, "on the first day of May, 1887, I promise,” etc. Notes in which a certain time is given for payment are called Time Notes.

b. If, in place of "sixty days after date," the words " on demand" were used, the note would be payable on demand. It would then be called a

"demand note."

2. Payee. a. As it now stands, the note is payable only to Mr. John Jones in person. A note thus drawn can not be transferred, and is said to be “not negotiable."

b. But if the note read, to "John payable to whomsoever he might order.

Jones or order," Mr. Jones could make it
Thus, if he wrote

Pay to William Jackson,
John Jones,

then William Jackson would be the only person to whom it would be payable. But if Mr. Jones wrote

Pay to William Jackson, or order,

John Jones,

then Mr. Jackson could in his turn make it payable to whomsoever he pleased, and in this way it might pass through dozens of hands.