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DISCOUNT.

288. 1. What sum put at interest at 5% will in 5 amount to $40?

years

Solution. -5 years' interest is .25, or of the principal. The amount is of the principal. As $40, then, must be of the principal, of the principal is 4 X of $40, or $32.

2. What sum on interest

years?

at 6% will become $ 36 in 33

3. When an article whose list price is $ 25 is sold for cash at 10% off, how much is the deduction?

4. If I borrow $200 for 4 months, and pay the interest at 6% in advance, how much is deducted from the debt for the interest?

289. Discount is the sum deducted from a debt or price.

TRUE DISCOUNT.

5. Fred Wood has this day bought a horse of me, agreeing to pay me $ 525 for it in 1 year without interest. If I prefer, he will pay me cash, provided I make him an equitable discount from the price. I propose a discount of $15. He objects, saying that I can then take the proposed price, $510, put it at interest at the current rate, 5%, and at the end of the year I shall have more than the original $ 525 which he agreed to pay. What discount ought I in justice to make?

290. The Present Worth of a debt, payable at a future time without interest, is the sum which will amount to the debt when it becomes due if put at interest at the current rate.

291. True Discount is the difference between the face of a debt and its present worth, and is equal to the interest of the present worth of the debt for the given time.

WRITTEN EXERCISES.

6. What is the present worth of a debt of $25.44 due one year hence, the current rate of interest being 6%? What is the true discount?

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worth of $1.06 is $ 1, the present worth of $25.44 must be as many dollars as $1.06 is contained times in $25.44, or $ 24. $25.44 $24 $1.44, the true discount.

NOTE. - The process is the same as finding the principal (Art. 268), the debt being the amount, the present worth the principal, and the true discount the interest.

7. What is the true discount of $192 due 4 years hence, money being worth 7% ?

292. Rule to find the Present Worth and True Discount.

Divide the given debt by the amount of $1 for the given time and rate, and the quotient will be the present worth. Subtract the present worth from the debt, and the difference will be the true discount.

8. What is the present worth of $3450, due in 1 months, without interest, the current rate being 7 %?

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9. What is the true discount of $172.86, due in 3 years

4 months, money being worth 6% ?

10. What is the present worth of $ 360, due in 90 days, the current rate being 4%?

11. What is the difference between the true discount and the interest on $ 5000 for 2 years 6 months at 7% ?

12. What must be the face of a note, due in 2 years 7 months 15 days, with interest, to exactly cancel a debt of $347.25, due in the same time, without interest, money being worth

COMMERCIAL DISCOUNT.

293. Commercial Discount is a certain percentage deducted from the price of an article, or from the face of a bill, for cash payment.

294. The Net Price of an article is the selling, or list price, less the discount.

13. When goods whose list price is $ 125 are sold at 5% off, what is the commercial discount?

14. What is the net cash price of a carriage billed at $ 350, on 30 days, or 6% off for cash?

15. What is the discount on a bill of goods invoiced at $1344.50, sold on 30 days, at 2% off for cash?

16. What is the net cash value of books amounting as per bill to $460.50, less a discount of 10% and 5% off for cash? 17. Paid $ 433 for goods after a discount of 6% had been made from the list price. What was the list price?

18. What is the difference in net cash value between a bill of $ 1600, less a discount of 25% and 5% off the remainder, and the bill less a discount of 30% ?

19. Find the amount of the following bill:

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A discount of 21% was allowed for cash payment.

20. Bought of A. L. Davenport 62 yards Brussels carpeting at $1.87; 118 yards 3-ply carpet at 907; 1 set parlor furniture, $285; 2 sets black walnut chamber furniture at $125 and $140. Received a discount of 5%. What was the amount of my bill?

BANK DISCOUNT.

Form of a Discountable Note.

$564 100

New York, July 10, 1882.

Sixty days after date, I promise to pay to the ord s of Edward Bradford five hundred sixty-four 100 at the Merchants' National Bank.

Value received.

50 dollars,

George Horton.

295. The above note may be transferred by the indorsement of the payee (Arts. 272 and 275) to any person to whom he may order it paid; or if the payee writes only his signature on the back, the note becomes payable to, and may be collected by, the bearer or holder.

Should the holder of this note wish to turn it into cash, he can take it at any time before its maturity to a bank. If the bank officers are satisfied that the maker and the indorsers are responsible parties, they will pay to the holder the face of the note less the interest on it from the day of discount to the day of maturity, retaining the note as security for the money advanced. On the day the note matures, the maker of the note, who has been previously notified that the note is held by the bank, appears at the bank and pays the note.

296. Bank Discount is an allowance made to a bank by the holder of a note for its payment before maturity.

It is the simple interest of the face of the note from the day of discount to the day of maturity, paid in advance.

297. The Proceeds of a note discounted are its face less the discount.

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298. Three Days of Grace are generally allowed by law after a note is nominally due, that is, after the expiration of the time named in the note for its payment, — before it is legally due.

NOTE 1. — A note matures, or becomes legally due, on the last day of grace, or on the day before when the last day of grace is Sunday or a legal holiday. NOTE 2. The time when a note is due is usually indicated by writing the date when nominally due and the date of maturity with a line between. Thus, Aug. 8/11, 1882.

299. The Term of Discount is the time from the day of discount to the day of maturity.

NOTE 1. - When a note is discounted at date, the term of discount is the time specified in the note plus three days of grace. When the note is discounted after date it is generally customary to use as the term of discount the exact number of days from the day of discount to the day of maturity.

A note is understood to be discounted at date if nothing is said to the contrary.

NOTE 2. - When a note is payable in a certain number of months, calendar months are understood, and the note is nominally due on the corresponding day of the month, or on the last day of the month when there is no corresponding day. Thus,

A 3-mo. note dated Dec. 31, 1881, is due March 31/April 3, 1882, but a 2-mo. note of the same date is due Feb. 28/March 3, 1882.

300. Rule for finding the Proceeds of a Note.

Find the bank discount by computing the simple interest of the face of the note from the day of discount to the day of maturity.

The bank discount subtracted from the face of the note gives the proceeds.

NOTE. - When an interest-bearing note is discounted, the discount must be computed on the amount due at maturity.

WRITTEN EXERCISES.

21. What are the proceeds of a 90-day note for $842 discounted at date at 6% ?

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