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110 *11-I-T-I-RACTICAL RULES
IV. When the principal is given in pounds, shillings, &c. New-England currency, at 6 percent. to find how much the menthly interest will be in federal money.
Rule.—Multiply the pounds, &c. by 5, and divide that product by 3, the quotient will be the interest for one month, in cents, and decimals of a cent, &c.
1. A note for £411 New-England currency has been on interest one month; how much is the interest thereof infe deral money? -411
Ans. 685 cts.-S6, S5 cts. 2. Required the interest of 391. 18s. N. E. currency, for 7 months? £
39.9 decimal value.
V. When the principal is given in New-England and Vir ginia currency, at 6 per cent to find the interest for a year, in dollars, cents, and mills, by inspection.
Rule.-Since the interest of a year will be just so intony cents as the given principal contains shillings, therefore, write down the shil. lings and call them cents, and the pence in the principal made less by 1 if they exceed 3, or by 2 when they exceed 9, will be the mills, very nearly.
575, 00 note dated April 17, 1793. Yr. mo
884, 25 amount of the note.
$219, 52 remains due on the note, June 17, 1798. 2. On the 16th January, 1795, Ilent James Paywell 50° dollars, on interest at 6 per cent, which I received back in the following partial payments, as under, viz.
1st of April, 1796 - - - - $ 50 16th of July, 1797 - - - - 400 1st of Sept. 1798 - - - - 60 How stands the balance between us, on the 16th Novem ber, 1800? Ans, due to me, $63, 18 cos. 3. A promissony Note, viz. c62 10s. New-London, April 4, 1797.
On demand, I promise to pay Timothy Careful, sixty-two pounds, ten shillings, and interest at 6 percent. per annum, till paid; value received.
John Stawny, PETER PAY WELL. Richand Testis. Endorsements. £. s. 1st. Received in part of the above note, September 4, 1799, 50 0 And payment June 4, 1800, 12 10 How much remains due on said note, the 4th day of De celnber, 1800. £. s. d.
Note:-The preceding Rule, by custom, is rendered so popular, and so much practised and esteemed by many on occount of its being simple and concise, that I have given it a place: it may answer for short periods of time, but in a long course of years, it will be found to be very errone----- Although this method seems at first view to be upon the ground of simple interest, yet upon a little attention the following objection will be found most clearly to lie against it, viz. that the interest will, in a course of years, completely expunge, or as it may be said, eat up the debt. For an explanation of this, take the following
A lends B 100 dollars, at 6 per cent. interest, and takes His note of hand; B does no more than pay A at every rear's end 6 dollars, (which is then justly due to B for the *se of his money) and has it endorsed on his note. At the and of 10 years B takes up his note, and the sum he has to lay is reckoned thus: The principal 100 dollars, on inte rest 10 years amounts to 160 dollars; there are nine endorsements of 6 dollars each, upon which the debtor claims interest; one for nine years, the second for 8 years, the third for 7 years, and so down to the time of settlement; the whole amount of the several endorsements and their interest, (as any one can see by casting it) is $70, 20cts, this subtracted from 160 dols, the amount of the debt, leaves in favour of the creditor, $89, 40 cts. or 810, 20cts, less than the original principal, of which he has not received a cent, but only its annual interest.
If the same note should lie 20 years in the same way, B would owe but 37 dols. 60 cts, without paying the least fraction of the 100 dollars borrowed.
Extend it to 28 years, and A the creditor would fall in debt to B, without receiving a cent of the 100 dols, which he lent him. See a better Rule in Simple Interest by detimals, page 175.
1S when the interest is added to the principal, at the end of the year, and on that amont the interest cast for another year, and added again, and so on: this is called interest upon interest.
Rule.—Find the interest for a year, and add it to the principal, which call the amount for the first year; find the interest of this amount, which add as before, for the amount of the second, and so on for any number of years required. Subtract the original principal from the last amount, and the remainder will be the Compound Interest for the whole time.
1. Required the amount of 100 dollars for 3 years at L percent. per annum, compound interest! $ cas. s ros. 1st Principal 100,00 Amount 106,00 for 1 year. 2d Principal 106,00 Amount 112,36 for 2 years. 3d Principal 112,36 Amount 19,1016 for 3 yrs. Ans. 2. What is the amount of 425 dollars, for 4 years, at a per cent. per annum, compound interest? Ans. $516, 59cts. 3. What will 400l. amount to, in four years, at 6 per cent. per annum, compound interest? Ans. E504 19s. 9d. 4. What is the compound interest of 1501. 10s. for 3 years, at 6 per cent. per annum? Ans. £28, 14s. 11+d.-5. What is the compound interest of 500 dollars for 4 years, at 6 per cent. per annum Ans. $131,238+ 6. What will 1000 dollars as "ont to in 4 years, at 7 per cent. per annum, compound interest? Ans. $1310, 79 cts. G. m. -7. What is the amount of 750 dollars for 4 years, at 6 per cent. per annum, compound interest? Ans. $946, 85 cts. 7,72 m. 8. What is the compound interest of 876 dols, 90 cents