FOREIGN EXCHANGE. 288. A bill in foreign exchange is usually called a Bill of Exchange. Bills of Exchange are usually made out in sets of three bills, all of the same tenor and date, called the First, Second, and Third of exchange, respectively. To prevent loss and delay, each bill of a set is sent by a different mail. If any one of these is paid, the others become void. 289. Exchange on Great Britain or Ireland is quoted at the value of a pound sterling in United States money. Thus, sight drafts on a bank or banker in Great Britain or Ireland are quoted, "Bankers' Sterling, sight, $4.861." Drafts drawn on merchants, due 60 days after sight, are quoted, "Commercial Bills, 60 days, $4.821." Exchange on France is quoted at the number of francs in a dollar. Thus, sight drafts on France are quoted, "Francs, sight, 5.16," meaning that it takes 5.16 francs to make a dollar in United States money. Exchange on Germany is quoted at the value of 4 reichsmarks in cents. Thus, sight drafts on Germany are quoted, "Reichsmarks, sight, 953," meaning that 4 reichsmarks are worth $.953. WRITTEN EXERCISES. 1. What will be the cost of a bill of exchange on London for £200 when exchange is quoted at 4.83? PROCESS. $4.83 200 Since each pound sterling costs $4.83, £200 will cost 200 times $4.83, which are $966. $966.00, Ans. 2. What will a bill of exchange on Paris cost for 1000 francs, exchange being quoted at 5.161? 3. What is the cost of a bill of exchange on Berlin for 2000 marks, exchange at 94? PROCESS. $.94 500 $470.00, Ans. If 4 reichsmarks cost 94 cents, 2000 reichsmarks, which is 500 times 4 reichsmarks, will cost 500 times $.94, which are $470. 4. Find the cost of a draft on Liverpool for £500, exchange being 4.851. 5. Find the cost of a draft for £1000 on London, exchange at 60 days being 4.841. 6. Find the face of a draft on Glasgow which costs $1556, exchange being 4.861. 7. What will a draft on Paris for 5200 francs cost when exchange is 5.16? 8. What will a draft on Havre for 840 francs cost when exchange is 5.163 ? 9. A merchant paid $420 for a draft on Paris, exchange at 5.181; what was the face? 10. How much must be paid for a draft on Berlin for 6000 reichsmarks, exchange being 96 ? 11. Find the cost of a draft on Hamburg for 12600 reichsmarks, exchange at 931. DUTIES OR CUSTOMS. 290. Duties, or Customs, are taxes levied on imported goods. A Specific Duty is a fixed tax on goods without regard to their cost. An Ad-valorem Duty is a certain per cent. of the cost of the goods in the country from which they are imported. Tare is an allowance made for the weight of the box, cask, etc. containing the goods. Breakage is an allowance for the loss of liquors in bottles. Leakage is an allowance for the loss of liquors in casks. Gross Weight is the weight before any allowances are made. Net Weight is the weight after all allowances have been made. WRITTEN EXERCISES. 1. A merchant imported 400 yards of dress goods, invoiced at 8 francs a yard; what is the duty at 50% ad valorem ? PROCESS. 400 3200 francs. .193 $618 Cost of goods. $309.00, Ans. If 1 yard cost 8 francs, 400 yards will cost 3200 francs. Since 1 franc is worth $.193, 3200 francs are worth $617.6, or $618. The duty is 50%, or .50 of $618, which is $309. 2. What is the duty at 24 cents a gallon on 300 quart bottles of oil, breakage 5% ? Since the breakage is 5%, duty must be paid on 100% - 5%, or 95%, of 300 bottles, which are 285 bottles. PROCESS. 300 .95 285 .06 $17.10, Ans. The duty on 1 bottle is 6 cents, and the duty on 285 bottles is $17.10. 3. What is the duty, at 3 cents a pound, on 3750 pounds of tin, tare 10%? 4. What is the duty on 12 boxes of raisins, each weighing 50 pounds, valued at 10 cents a pound, 10% tare, duty 8% ad valorem? 5. What is the duty, at 25% ad valorem, on 50 tons of steel, tare 20 pounds to the cwt., invoiced at 18 cents a pound? 6. What is the duty, at 45 cents a square yard and 40% ad valorem, on 800 yards of carpet, of a yard wide, invoiced at 10 francs a yard? ANNUITIES. 291. An Annuity is a definite sum of money payable at regular intervals of time. The Amount, or Final Value, of an annuity is the sum of the amounts of all the payments on interest from the time each is due until the annuity ceases. The Present Value of an annuity is a sum which, if put on interest for the given time and rate, will amount to the final value. 292. Annuities at Simple Interest. WRITTEN EXERCISES. 1. What is the final value of an annuity of $600, payable annually, for 4 yr. at 5% ? ILLUSTRATION. 600 600 600 = 600 == 600 = 600 630 660 690 The last payment will draw no interest; the last but one will draw interest for 1 year; and so on. It is thus seen that an annuity at simple interest forms an arithmetical progression in which the annuity is the first term, the interest for 1 year is the common difference, the number of years is the number of terms, and the final value is the sum of the series. Therefore, by ART. 269, The sum of the terms = ($600 + $690) ✯ = $2580, Ans. 2. Find the present value of an annuity of $800 for 10 yr., Take the annuity for the first term, the interest for 1 year for the common difference, and the time for the number of terms; find the last term, and then the sum of the terms; this sum will be the final value. Then find the present value of the final value. Find the present value— 3. Of an annuity of $400 for 5 yr. at 6%. 293. Annuities at Compound Interest. WRITTEN EXERCISES. 1. Find the final value of an annuity of $600 for 4 yr. at 5% compound interest. ILLUSTRATION. 600 600 600 600 The last payment will draw no interest; the last but one will draw interest for 1 yr.; the last but two will draw compound interest for 2 yr.; and so on. |