TAXES IN SCHOOL DISTRICT No. 4, AURORA, ILLINOIS. 1. Make an enlarged copy of the above upon which extend the taxes of A, B, C, etc. NOTE. It will be well for the student to find each tax item (1) by means of the table given on the preceding page and (2) by finding the product of the assessed value and the rate. The two results should be identical. Find the total of each person's tax by adding the eight tax items. Prove the work by finding the tax of each person, at $6.51 per hundred dollars of assessed valuation. The amount thus found will be a few cents less than the amount found by adding. See foot-note on page 291. In the Bank. INTEREST ON DAILY BALANCES. Sometimes a person who has a large but constantly varying sum of money which he wishes to keep on deposit in some reliable bank, can arrange with the bank officials to receive at the end of each month 2% or more on his daily balances. The accountant at the bank ordinarily employs carefully prepared tables for computing the interest due a depositor. Regarding 360 days as a year, accounts like the following can easily be computed without the aid of interest tables. 1. Make an enlarged copy of the above account and extend the balances and interest for the month of May. Compute the interest at the rate of 2% per annum. * Mr. Smith is entitled to interest on $5000 from Apr. 1 to Apr. 5, 4 days. (5000x4 =20000). This equals the interest on one dollar for 20000 days. Hence "20000" is carried into the interest column. + In computing interest on daily balances, it is customary to omit any fraction of a dollar that may appear in the principal. In some banks interest is computed on full hundreds of dollars only; thus, if the balance is $5742 interest is allowed on $5700. The interest on $1.00 for 160745 days at 6% is (160745+6) 26790 mills; at 2% it is one third this number (26790÷3) or 8930 mills. This equals $8.93. 6)160745+ 8930 mills. Interest on Daily Balances. Rule paper as suggested on the preceding page, arrange in proper form the accounts given below, and find the balance of each account on the last day of the month, allowing interest on daily balances at the rate of 2% per annum.* 1. FLORIAN CAJORI. June 1, deposited $8000. June 6, deposited $400. June 30, deposited $200. 2. ARTHUR LEFEVRE. May 6, deposited $4270. May 7, withdrew $342.50. Aug. 10, deposited $10000. Aug. 15, deposited $5000. Aug. 20, deposited $3000. Aug. 24, deposited $6000. Aug. 30, deposited $1000 and withdrew $3246.54. *These problems are mainly for a test of the ability of the student to work in figures with care and to secure accurate results. Let no pupil be satisfied with his self-training in this respect unless he can do all the work suggested on this page, and present it to his teacher in good form and absolutely free from errors in figures. Unless he can do this, he would, with his present attainments, be of little value as an accountant. The business world demands accuracy in accounts. Compound Amount. It is sometimes necessary in business to find the compound amount of money at interest. This is done by adding the interest to the principal at the end of a specified period and using the sum thus found as a new principal upon which the interest is computed and the amount obtained as before. This process is repeated as many times as there are interest bearing periods. To find the compound interest, subtract the original principal from the compound amount. 1. What is the compound amount of $200 for 2 years, interest at 6% per annum to be compounded annually? 2. What is the compound interest of $200 for 2 years, at 6% per annum to be compounded annually? 3. How much more is the compound interest of $200 for 2 years at 6%, than the simple interest of the same sum for the same time and rate? Why? 4. Without solving the two interest problems in full, tell how much more the compound amount of $500 for 2 years at 6%, is, than the simple amount of the same sum for the same time and rate. 5. Find the compound amount of $350 for 2 yr. 6 mo. at 6% per annum, interest to be compounded annually.* 6. Find the compound amount of $350 for 2 yr. 6 mo. at 6% per annum, interest to be compounded semi-annually.† Compare the answer to this problem with the answer to Problem 5. yr. 4 mo. 7. Find the compound amount of 425.40 for 2 12 da. at 6%, interest to be compounded annually. 8. If Mark Mahan puts $100 at interest at the rate of 6% per annum, on the first day of each January for 8 successive years, and if at the end of each year he collects and loans the interest due him, at the same rate, all this will amount to how much, 8 years from the time of his first investment? * Interest must be computed for three periods-the first two, one year each, and the third, six months. This calls for the compound amount for five periods at 3%. Table Showing the compound amount of $1.00 at 2, 3, 4, 5, and 6 per cent, for any number of periods, from 1 to 20. 1. Solve again the problems on page 295, using in the work, items from the above table.* NOTE.-In Savings Banks the interest due depositors is compounded usually semi-annually; that is, the interest if not with. drawn, is added to the principal every 6 mo. 2. Twelve hundred dollars deposited in a savings bank that pays interest at the rate of 4% per annum and compounds it every 6 mo., will amount to how much in 10 years? † *To solve problem 8 on page 295, it will only be necessary to add the first eight numbers in the "6 per cent" column and multiply the sum by 100. Why? + Think of this money as loaned for 20 “2 per cent" periods. |