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3288.60

3240.00

$48.60 = paid for a draft of $3240.

The rate is

48.60 3240.00'

reduce by 32.4

11

=

100

= 11%; the result will be the same if reduced to a decimal ;.thus,

1.5 = 100) 1.5000 (.015

100

REM. The ratio of the face of the draft and the premium paid on it, reduced to a fraction whose denominator is 100, will be the rate per cent of the draft; the same result is obtained by reducing the fraction to a decimal. The premium is the numerator, and the amount on the face of the draft the denominator of the fraction.

5. What is the cost of a 60 day draft on New York for $5480, at 1% premium, interest off at 6%?

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6. What is the face of a draft which cost $1007.50, at

% premium ?

7. What is the face of a draft that cost $992.50, at 4% discount?

8. What is the face of a draft on which $5 premium is paid, and the rate 1%? T = $5;

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FOREIGN EXCHANGE.

EXAMPLES.

1. What is the cost in New York of a draft on London for £546 15s. 6d., at 8% premium ?

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2. What amount of debt in London may be paid by depositing $5000 in New York, rate of exchange 8% in favor of London?

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5000 × 8 × 1 = 125 × 25 = £1041 13s. 4d.

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3

3. What is the cost of a draft on London for £546.775

in New York, exchange $4.88 to the £?

546.775 4.88 = $2668.262.

4. What will a draft on London for £1041 13s. 4d. cost in New York, exchange $4.80 to the £?

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5. What is the value in Paris of $5000 in New York exchange $4.85 £1, and £125.20 francs?

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6. What sum in New York will pay 2597937 francs in Paris, exchange as in 5th?

2597987 20
485
X 2520

7. What is the value in Hamburg of $5000 in New York, when $4.80

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£1, £1 = 25.20 francs, and 1.80

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8. What sum in New York will pay 14583 mark banco in Hamburg, exchange as above?

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9. What debt in St. Petersburg will $5000 in New pay, when $4.80

York

£1 in London, £125.20f. in

Paris, 4f. = 1 thaler in Dantzic, and 1 thaler = 2.60 roubles?

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$5000 × 25×× = 125×21×13 = 17062 roubles.

*

These problems may be solved by compound equations and ratios.

10. What sum in New York will pay 17062 roubles in St. Petersburg, exchange as above?

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REM. This circuitous system of Foreign Exchange has led us into the same thing in our own country when it is found to be advantageous; thus,

11. A merchant in St. Louis has a bill of $5000 to pay in New York; in St. Louis a draft on New York costs 11% premium, whilst New Orleans funds can be. bought at 11% premium, and at New Orleans Havana funds are 1% discount; and at Havana, New York funds are at a discount of 14%. What sum in St. Louis will pay the bill by the direct and by the circuitous method?

Direct,

25

25 1011 $5000 × 100

79

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And $5000 × 285 × 128 × 1 = $4974.2211.

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12. What is $4974.2217 in St. Louis worth in New York by the circuitous method?

4974.2211 x 188 × 188 × 488 = $5000.

I have not given a table of foreign values, as they are not permanent. The principle is the same in all cases.

REM. 1.-In the ratios, see that the decimals in the numerator and denominator are equal, and then they are like quantities and can be used as such.

REM. 2.-When any thing is purchased at a premium, the ratio of the cost is increasing; as, at 3% premium, the ratio is 108; if purchased at a discount the ratio of the cost is diminishing; as, at 3% discount, the ratio is; hence, if I purchase a draft for $100 at 3% premium, the cost is $100 × 108 $103; and if I purchase a draft for $100 at 3% discount, the cost is $100 × 19% = $97.

97

COR. 1.-The cost of a draft, when at a premium, is its face multiplied by an increasing ratio whose denominator is 100 and numerator 100 increased by the premium.

COR. 2.-When there is a discount, the cost of a draft is its face multiplied by a diminishing ratio whose denominator is 100 and numerator 100 diminished by the discount.

REM.-Reckoning by the old par value, £1 is equal 40 dollars, and $1 equal £4. The par value of £1 is now fixed by Act of Congress at $4.8665.

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