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BANK DISCOUNT. 219. Bank Discount is the simple interest of a note, draft, or bill of exchange, deducted from it in advance, or before it becomes due.

The interest is computed, not only for the specified time, but also for three days additional, called days of grace. Thus, if a note is given at the bank for 60 days, the interest, which is called the discount, is computed for 63 days; and if the note is paid within this time, the debtor complies with the requirements of the law.

The Legal Rate of Discount is usually the same as the legal rate of interest; and the difference between bank discount and true discount is the same as the difference between interest and true discount.

A note is said to be discounted at a bank, when it is received as security for the money that is paid for it, after deducting the interest for the time until it shall become due.

The Avails, Proceeds, or Present Worth of a note is the sum paid for it.

220. To find the bank discount and the present worth of a note.

Ex. 1. What is the bank discount on $ 842 for 90 days, at 6 per cent. ? What is the present worth?

Ans. $ 13.051 discount ; $ 828.949 present worth. FIRST OPERATION.

SECOND OPERATION. Sum discounted, $ 842 Sum discounted,

$ 842.000 Int. of $ 1 for 93d. .0155

Ido of sum=

int. for 60d., 8.420 4210

of int. for 60d. = int. for 30d., 4.210 4210 of int. for 30d.

int, for 3d., .421 842 Bank discount,

$ 13.051 Bank discount, $ 13.0510 Present worth,

$ 828.949 Present worth $ 842 — $ 13.051 $ 828.949, Ans. We find the interest of the sum discounted, as in Art. 193, and this interest is the bank discount, which, subtracted from the sum discounted, gives the proceeds, or the present worth.

219. What is bank discount? When is it paid? Is interest computed for more than the specified time? What are these three additional days called? How will you illustrate this? What is the legal rate of discount? The difference between bank discount and true discount? When is a note said to be discounted at a bank? What is the sum paid for it called ? — 220. Explain the operation for finding the bank discount on any sums

RULE. Find the interest on the note, or sum discounted, for the given rate and time, including THREE days of grace, and this interest is the DISCOUNT.

Subtract the discount from the face of the note or sum discounted, and the remainder is the PRESENT WORTH.

Note: A convenient method of calculating interest for Days, is to divide the principal by 100, by removing the decimal point two places to the left

, and then taking such a purt of the quotient as the given number of days is part of 60 days; as in the second operation.

EXAMPLES FOR PRACTICE. 2. What is the bank discount on $ 478 for 60 days ?

Ans. $ 5.019. 3. What is the bank discount on $780 for 30 days ?

Ans. $ 4.29. 4. What is the bank discount on $ 1728 for 90 days?

Ans. $ 26.784. 5. How much money should be received on a note of $ 1000, payable in 4 months, discounting at a bank where the interest is 6 per cent. ?

Ans. $ 979.50. 6. What sum must a bank pay for a note of $ 875.35, payable in 7 months and 15 days, discounting at 7 per cent. ?

Ans. $ 836.542. 7. What are the avails of a note of $ 596.24, payable in 8 months and 9 days, discounted at a bank at 8 per

cent. ?

Ans. $ 562.85. 8. What is the bank discount of a draft of $ 1350.50, payable in 1 year, 4 months, at 5

Ans. $ 90.596. 221. To find the amount for which a note must be given, that the avails may be a specified sum.

Ex. 1. For what amount must a note be given, payable in 90 days, to obtain $ 500 from a bank, discounting at 6 per cent. ?

Ans. $ 507.872.

Since $0.9845, present worth, $ 1.0 0 0 0

requires $ 1 to be discounted for Int. of $1 for 93da., .0 1 5 5 the given time, $ 500 will require Present worth of $ 1, .9 8 4 5

as many dollars to be discounted

as $ 0.9845 is contained times in $ 500 ; .9845 $ 507.872

$ 500, or $ 507.872. Hence the

per cent. ?

OPERATION.

220. The rule?- 221. Explain the operation for finding the amount for which a note must be given at a bank to obtain a specified sum for a given time.

RULE. - Divide the given sum by the present worth of $1 for the given rate of bank discount and time, including THREE days of grace, and the quotient will be the answer.

EXAMPLES FOR PRACTICE.

2. For what sum must I give my note at a bank, payable in 4 months, at 6 per cent. discount, to obtain $ 300 ?

Ans. $ 306.278. 3. A merchant sold a quantity of lumber, and received a note payable in 6 months ; he had his note discounted at a bank, at 6 per cent., and received $ 4572.40. What was the amount of his note ?

Ans. $ 4716.245. 4. A gentleman wishes to take $ 1000 from the bank ; for what sum must be give his note, payable in 5 months, at 6 per cent. discount?

Ans. $ 1026.167. 5. The avails of a note, discounted at the bank for 8 months, at 71 per cent., were $ 483.56; what was the face of the note ?

Ans. $ 509.345.

INSURANCE.

222. Insurance is indemnity obtained, by paying a certain sum, against such losses of property or of life as are agreed upon.

The Insurer or Underwriter is the party taking the risk, and the Insured the party protected.

The Policy is the written obligation, or contract, entered into between the parties.

Premium is the amount of percentage paid on the property insured for one year, or any specified time.

As a security against fraud, property is not usually insured for its whole value, nor is the insurer or underwriter bound to indemnify the insured for a loss more than is specified in the policy.

221. What is the rule ? — 222. What is insurance? What is the party called that takes the risk? What is the party called that is protected? What is the policy? The premium ? Is property usually insured to its whole value ?

223. To find the premium, the rate and amount being given. Ex. 1. What is the premium on $ 485 at 2 per cent. ?

Ans. $ 9.70.

OPERATION.

$ 485 x .02= $ 9.70.

RULE. — Find the percentage on the given sum, and the result is the premium. (Art. 191.)

EXAMPLES FOR PRACTICE.

2. What is the premium on $ 868 at 12 per cent. ?

Ans. $ 104.16. 3. What is the premium on $ 1728 at 15 per cent. ?

Ans. $ 259.20. 4. A house, valued at $ 3500, is insured at 14 per cent. ; what is the premium?

Ans. $ 61.25. 5. A vessel and cargo, valued at $ 35000, are insured at 3 per cent. ; now, if this vessel should be destroyed, what will be the actual loss to the insurance company? Ans. $ 33687.50.

6. A cotton factory and its machinery, valued at $ 75000, are insured at 24 per cent.; what is the yearly premium ? and if it should be destroyed, what loss would the insurance company sustain?

Ans. $ 1875 premium ; $ 73125 loss.

CUSTOM-HOUSE BUSINESS.

224. Duties are sums of money required by government to be paid on imported goods.

All goods from foreign countries brought into the United States are required to be landed at particular places, called ports of entry, where are custom-houses, at which the duties or revenue is collected.

Duties are either specific or ad valorem.

A Specific Duty is a certain sum paid on a ton, hundred weight, yard, gallon, &c.

223. What is the rule for finding the premium on any amount of property insured ? 224. What are duties? Where are duties collected ? What is a specific duty ?

An Ad valorem Duty is a certain per cent. paid on the actual cost of the goods in the country from which they are imported.

Draft is an allowance for waste made in the weight of goods.

Tare is an allowance made for the weight of the cask, box, &c., containing the commodity.

Leakage is an allowance for waste made on liquors.

Gross Weight is the weight of the commodity, together with the cask, box, bag, &c., containing it.

Net Weight is what remains after all allowances have been made.

By the tariff of 1861, duties are specific on some articles; and on others, either ad valorem or specifio and ad valorem.

It has been decided that no allowances for tare, draft, break. age, &c., are applicable to imports subject to ad valorem duties, except actual tare, or weight of a cask, or package, and the actual drainage, leakage, or damage. The collector may cause these to be ascertained, when he has any doubts as to what they

are.

225. To calculate ad valorem duties.

Ex. 1. At 23 per cent., what is the ad valorem duty on 165 yards of broadcloth, at $5 per yard?

Ans. $ 206.25.

OPERATION.

$ 5 X 165 = $8 25; $ 8 2 5 X.25 =$ 2 0 6.2 5, duty.

RULE. Find the percentage on the cost of the goods, and the result is the ad valorem duty. (Art. 191.)

Note. — When there is actual draft or tare, the necessary deductions must be made, before reckoning the duty.

EXAMPLES FOR PRACTICE.

2. What is the duty on 17281b. of copper sheathing, invoiced at $ 3200, at 20 per cent. ad valorem ?

Ans. $ 640. 3. What is the duty on 2231lb. of Russian iron, at 30 per cent. ad valorem; the cost of the iron being 4 cents per lb. ?

Ans. $ 26.772, duty. 4. What is the duty on 1691lb. of lead, at 20 per cent. ad valorem; the value of the lead being 5 cents per pound ?

Ans. $ 16.91, duty.

224. What is an ad valorem duty ? What is draft? Tare? Gross weight : Net weight ? — 225. What is the rule for finding the ad valorem duty ?

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