INSURANCE....SIMPLE INTEREST BY DECIMALS. 119.

INSURANCE.

INSURANCE is a security by contract, to indemnify for a specified sum, the insured for such loss or damage as may happen to the property, for a limited time.

The premium is the sum paid by the insured for the insurance of his property, and is generally at so much per cent.

RULE.-Multiply the sum to be insured by the rate per cent. and divide the product by 100;-the quotient will be the premi

um or answer.

EXAMPLE.

What will be the annual premium for insuring a house against loss by fire, valued at $5600, at 3 per cent.? Ans. $42.

A TABLE OF RATIOS FROM ONE DOLLAR, &C. TO TEN DOLLARS. Ratio is the simple interest of $1 or £1 for one year, at the rate per cent. agreed on, and is found by dividing the rate by 100, and reducing it .06, and 15.05.

Thus 180

to a decimal.

A TABLE for the ready finding of the decimal parts of a year, equal to number of months and days, allowing 12 months, or 365 days to

1. Multiply the principal by the ratio, the product will be the interest for one year.

2. To find the interest for more years than one, multiply the interest of one year by the given number of years, and the product will be the interest for that number of years.

3. To find the interest for months, or months and days; multiply the interest of one year by the decimal parts which are equal to the given number of months, or months and days, and the product will be the interest for that time.*

EXAMPLES.

1. What is the interest and amount of $475.50 for 4 years, months, 25 days, at 6 per cent. ?

* This rule is a contraction of the general rule for simple interest.

215. What is the rule for computing simple interest by decimals?

2. If a factor sell a cargo for me, to the amount of $1750, on commission at 24 per cent, and purchase me another cargo of the value of $2500, on commission at 1 per cent; what will his commission on both cargoes amount to ?

Ans. $83.125.

COMPOUND INTEREST.

COMPOUND INTEREST is that which arises from the interest being added to the principal at the end of each year, and making the amount the principal for the next succeeding year.

RULE. Find the interest of the given sum for one year, and add it to the principal, the amount is the principal for the second year; then find the interest of that amount, and add as before, and thus proceed for any number of years required.

216. What is Compound Interest?217. What is the rule for calculating compound interest?

Q

Subtract the first principal from the last amount, and the remainder will be the compound interest for the whole time.*

EXAMPLES.

1. What is the compound interest of $680 for 4 years, at 6 per cent ?

Ans. $178.484 compound interest for 4 years.

2. What is the compound interest of £400, for 3 years, at 5 per cent. ?

Aus. £63 1s.

3. What will be the amount and compound interest of 1000 dollars for 5 years, at 6 per cent. ?

* It is not usually necessary to carry the work beyond mills; therefore, when the figure next beyond mills, at the right is 5 or more than 5, increase the number of mills 1; when it is less than 5, it may be omitted, and the result will be exact enough for common purposes.

COMPOUND INTEREST BY DECIMALS.

TABLE showing the amount of $1, or £1, at 5 and 6 per cent. per annum, compound interest, from 1 year to 20 years.

RULE 1.-Multiply the given principal continually by the amount of one dollar, or one pound, for one year, at the rate per cent. given, until the number of multiplications be equal to the given number of years, the last product will be the amount for the whole time; from which subtract the given principal, and the remainder will be the compound interest. Or,

RULE 2.-Multiply the amount of one dollar, or one pound, for the given number of years, by the given principal, the product will be the amount required; from which subtract the giv en principal, and the remainder will be the compound interest.

EXAMPLES.

1. What will be the amount and compound interest of $500 for 3 years, at 6 per cent. ?

By rule 1. $500 X 1.06 X 1.06 X 1 06 = $595.508 Amt. $595.508-500 95.508 Comp. Int.

By rule 2. Amount of one dollar for 3 years = 1 191016

principal =

500

Amount $595 508000

500

Comp. Int. $95.508000

218.

What is the method of computing compound interest by decimals ?