WRITTEN EXERCISES.

407. 1. What will be the cost of a sight draft upon New York for $10,000, at 1% premium?

$1$.001-$1.001.

EXPLANATION. Since exchange on New York is at 4% premium, every dollar of the draft will cost $1.001,

$1.00×10,000=$10,025. and a draft for $ 10,000 will cost 10,000 times 1.001, or $10,025.

2. What will be the cost in Boston of a draft for $5000 on St. Paul, payable 2 mo. after date, the rate of exchange being at 1% premium ?

$1+$.00-$1.005.

$1.005-$.0105-$.9945.

EXPLANATION. -Since the exchange on St. Paul is at % premium, every dollar of the draft

$.9945×5000-$4972.50. would cost $1.005 if paid at sight. But since the draft is not to be paid in St. Paul for 2 mo. and 3 da., the banker in Boston, who has the use of the money for that time, inasmuch as he is not obliged to pay the draft for 2 mo. 3 da., allows the bank discount on the face of the draft for that time. The bank discount in Minnesota for that time at the legal rate is $.0105, and this subtracted from $1.005 gives the cost of $1 of the draft. Since the cost of $1 of the draft is $.9945, the cost of $5000 is 5000 times that sum, or $4972.50.

3. What will be the cost in St. Louis, Mo., of a sight draft on Philadelphia for $1200, the rate of exchange being at % premium?

4. What will be the cost in Denver of a sight draft on Boston for $1500, exchange being at 3% discount?

5. What must be paid in New York for a sight draft on Cleveland for $ 800, when exchange is at 5% premium?

6. What will be the cost in Cincinnati of a draft for $1600 on Topeka, payable 2 mo. after date, exchange being at 1% premium, and interest at 8% ?

7. What must be paid for a draft for $475, payable 30 days after date, at 1% premium, and interest at 6% ?

8. What must be paid for a draft drawn at Philadelphia on Indianapolis for $600, payable 90 days after date, at 3% discount, interest at 6% ?

9. Find the cost of a draft for $900, payable in 60 days, when exchange is at 1% premium, and interest at 7%. 10. What will be the cost of a draft on Galveston for $1200, payable in 60 days, exchange being at 11% discount, and interest at 8% ?

11. What must be paid for a draft of $550, at 30 days, exchange being at % premium, and interest at 4% ?

12. Find the cost of a draft on Des Moines for $1750, payable 90 days after date, exchange being at 11% discount, and interest at 7%.

13. How large a sight draft on New Orleans can be purchased for $5000, when the exchange is at 11% premium? $1$.015 $ 1.015. EXPLANATION. - Since exchange is $5000÷$1.015-4926.11

at 11% premium, it will cost $ 1.015 to buy a draft for $1, and $5000 will buy a draft for as many dollars as $1.015 is contained times in $5000, or $4926.11.

14. How large a draft in Buffalo, N.Y., can be purchased for $3000, payable 2 mo. after sight in Raleigh, N.C., exchange being at 1% discount?

=

$1.00-$.01 $.99. $.99-$.0105-$.9795.

EXPLANATION. - Since exchange is at 1% discount, it would cost $.99 to buy a draft of $1, if it were pay

$3000÷$.9795=3062.78+ able at sight. But since the draft is not to be paid until 2 mo. 3 da.,

the banker in Buffalo, who has the use of the money for that time, allows bank discount upon the face of the draft for that time, or $.0105 for every dollar. Therefore, since it costs $.9795 to purchase a draft of $1, $3000 will purchase a draft for as many dollars as $.9795 is contained times in $3000, or $ 3062.78.

15. How large a sight draft can be purchased on Cincinnati for $2800, when the rate of exchange is at 3% premium?

16. How large a sight draft can be bought on Boston, Mass., for $1260, when the exchange is at 14% premium?

STAND. AR.-20

17. How large a sight draft on New York can be purchased in St. Joseph, Mo., for $1800, when the exchange is at % discount?

18. How large a draft, payable 30 days after sight, can be bought for $2000, exchange being at 1% premium, and money being worth 6% ?

19. Find the face of a draft on Detroit, at 60 days sight, bought for $650, exchange being at 11% premium, and money being worth 6%.

20. What is the face of a draft on New Orleans, at 90 days sight, which may be bought for $1000, exchange being at 1% discount, and money being worth 7% ?

FOREIGN EXCHANGE.

408. Foreign Exchange treats of drafts drawn in one country and payable in another.

1. Drafts drawn in one State and payable in another are sometimes considered as foreign drafts or bills of exchange.

2. Foreign bills of exchange are drawn upon Antwerp, Amsterdam, Hamburg, Bremen, Berlin, and other commercial centers, but drafts upon London and Paris are much more common since they are paid in any part of Europe.

409. Three drafts or bills of the same date and tenor, named respectively the first, second, and third of exchange are sent by different mails, so that if one is lost the other may be presented. Such a set is called a Set of Exchange. When one bill of the set is paid the others are void.

410. The value of a pound sterling or sovereign in American gold is $4.8665.

The value of a franc is about $.193, or 5.18 francs per dollar.

The values of the pound sterling and the franc given above, are the values when exchange is at par, but they are continually fluctuating on account of the demand for bills of exchange, the rate being above or below par according as the demand is large or small.

WRITTEN EXERCISES.

411. 1. What is the cost in New York of a sight draft on London for £312 15s. 5 d., when exchange is $4.87 for a pound sterling?

SOLUTION.

£312 15 s. 5 d. = £312.7708, value in pounds and decimals of a pound. $4.87 × 312.7708 = $1523.193+, the cost of the draft.

2. How large a bill of exchange at sight on London can be bought in New York for $2984.38, exchange being at $4.86 for a pound sterling?

SOLUTION.

$2984.38 $4.86 614.0699.

.. $2984.38 = £614.0699.

£614.0699 = £614 1s. 4 d., the face of the draft.

3. What must be paid in New York for a bill of exchange at sight on London for £425 8s., when sterling exchange is quoted at $4.871?

4. What will a sterling bill at sight for £317 9 s. cost in Philadelphia when exchange is quoted at $4.901⁄2?

5. How large a draft at sight on London can be bought in Chicago for $1950, when exchange is $4.863 ?

6. How large a bill of exchange at sight on London can be bought in New York for $2875.80, when exchange is quoted at $4.871 ?

7. How large a bill of exchange at sight on London can be bought in New York for $4000, when exchange is $4.865?

8. How much must be paid for a bill of exchange on Paris, at sight, for 5000 francs, exchange being 5.16 francs to the dollar?

9. What must be paid for a sight bill of exchange on Paris for 7865 francs, exchange being 5.18 francs to the dollar?

10. Find the cost of a bill of exchange at sight on Bremen for 5344 marks, exchange being at $.95 (per 4 marks).

PARTNERSHIP.

412. 1. If two men, who have equal sums invested in the same business, gain $100, what is each man's share of the gain?

2. If one man furnishes of the capital, and another of it, and the gain is $1200, what should be the gain of each?

3. Mr. A furnishes $3000 of the capital, and Mr. B. furnishes the rest, which is $5000. What part of the profits should each receive?

4. Four partners furnish money in the proportion of $2000, $3000, $ 4000, and $5000 respectively. What part of the gain should each one receive?

5. Three men engage in business and furnish the following sums respectively: A, $5000; B, $4000; C, $3000. How much of the gain should each receive, if $1200 was gained during the year?

6. The profits of a company were $800 for a certain time. What share of the profits did each partner receive, if the capital contributed by them was $900, $700, and $800 respectively?

7. A and B formed a partnership after A had been doing business alone for 6 months. A had $5000 invested during the year, and B had $10,000 invested for 6 months. The gain was $5000. What was each one's share of the gain? 8. The cost of a pasture was $27. A had in it 5 cows for 3 weeks, and B 3 cows for 4 weeks. What should each