283. Business men, when settlement is made within a year after interest begins, often make use of the following, called

The Merchants' Rule.

Find the amount of the note or debt from the time of its beginning to draw interest to the time of settlement; also, the amount of each payment from its date to the settlement; and then subtract the sum of the amounts of the payments from the amount of the note or debt.

$850.

144.

PHILADELPHIA, Jan. 2, 1882.

For value received, I promise to pay John S. Moreland, or bearer, eight hundred fifty dollars, on demand, with interest at 6 per cent. ARTHUR AYER.

INDORSEMENTS: March 18, 1882, $200; May 2, 1882, $150; Aug. 18, 1882, $300. What was due Dec. 2, 1882?

For value received, I promise to pay to the order of Simeon H. Wright eleven hundred sixty-four dollars, with interest at 7%. ALFRED SHAW.

INDORSEMENTS: Sept. 21, 1881, $250; Nov. 22, 1881, $315; March 6, 1882, $100; May 17, 1882, $200. What was due on settlement, July 6, 1882 ?

COMPOUND INTEREST.

146. Alfred Nickerson deposits in a savings-bank $600, with the understanding that at the end of every 6 months he is to receive interest on his deposit at the yearly rate of 4%. How much interest is due him at the end of 6 months?

147. If he does not choose to draw this interest, it will be placed to his credit with his original deposit. Of what sum should he receive the interest for the next 6 months?

148. How much interest will be due him from the bank for the second 6 months?

149. Suppose that he allows all his money to remain in the bank, on how much will he receive interest for the third period of 6 months?

284. Compound Interest is the interest on both the principal and its unpaid interest added to it at stated intervals.

285. Interest may become due, and made a part of the principal, or compounded, according to agreement, at the end of each year, half-year, or quarter, or any other period of time.

150. What is the compound interest and the amount of $500 for 2 y. 7 mo. 12 d. at 6% ?

151. What is the compound interest of $750 for 4 years at 5%?

286. Rule for Compound Interest.

Find the amount of the given principal for the first period of time. Using this amount as a principal, find its amount for the second period, and so on for the entire time. The last amount, less the given principal, will be the compound interest.

NOTE. When the interest is compounded half-yearly, the rate must be considered one half the yearly rate, and when quarterly, one fourth the yearly rate. Interest compounds annually if nothing is said to the contrary.

152. What is the compound interest of $600 for 3 years. 6 months at 5%?

153. What is the compound interest of $320 for 2 y. at 7% ?

9 mo.

154. What is the compound interest of $500 for 4 y. 4 mo. 15 d. at 4% ?

155. What is the amount of $1000 for 2 years at 6%, compounded half-yearly?

156. What is the amount of $1200 for 1 y. 6 mo. at 4%, compounded quarterly?

157. Willard Aldrich deposits $ 200 in a savings-bank paying 4% interest, compounding half-yearly. He withdraws his money after three dividends have been declared. How much has he?

158. Charles Underhill borrows $2000 for 1 y. 8 mo. 24 d., paying simple interest at 6%. He lends it immediately at 7% compound interest. What does he gain?

159. What is the compound interest of $300 for 4 y. 8 mo. 12 d. at 8%, interest compounding semi-annually?

287. The computation of compound interest may be abridged by means of the following

TABLE

SHOWING THE AMOUNT OF $1 AT COMPOUND INTEREST, FROM 1 TO 20 YEARS, AT 11, 2, 21, 3, 31, 4, 5, 6, 7, 8, 9, and 10 PER CENT.

Yrs. 1 per cent. 2 per cent. 2 per cent. 3 per cent. 3 per cent. 4 per cent.

NOTE 1. When the time extends beyond the limits of the table, find the amount for a convenient length of time, and use this amount for a new principal.

NOTE 2. If the interest is compounded half-yearly, take one half the given rate and twice the number of years; and if compounded quarterly, take one fourth the given rate and four times the number of years.

160. What is the compound interest of $400 for 15 6 months at 6%?

years

Solution.

Amt. of $1 for 15 y. at 6%, from table

$2.396558

Amt. of $400 for 15 y. at 6% = $2.396558 x 400 = $958.623

161. What is the amount of $500 for 20 years at 7% compound interest?

162. What is the compound interest of $120 for 14 years at 8% compound interest?

QUESTIONS.

254. What is interest? 255. The principal? 256. The amount ? 257. The rate?

258. What is simple interest? 260. What is the general method of computing simple interest? 262. What is the six per cent

method?

264. How may the six per cent method be shortened? 265. What is the method for finding the exact interest for parts of a year? 266. How do you find the rate of interest, the principal, interest, and time being given?

267. The time, the principal, interest, and rate being given? 268. The principal, the interest or amount, time, and rate being given?

270. What is a promissory note? 273. The face of a note? 277. What are partial payments? Indorsements?

282. What is the United States Rule for partial payments?

284. What is compound interest? 286. What is the process of computing compound interest?