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RULE.

177. Multiply the sum on commission, or insurance, by the rate per cent. and the product will be the commission, or premium. (162)

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178. The methods of computing interest on notes and bonds differ in different places. Those in most general use are the following:

I. Find the amount of the principal up to the time of payment, and also the amount of the endorsements from the time they were made up to the time of payment; deduct the latter from the former, and the remain. der will be the sum due.,

This method is evidently erroneous; for suppose a note be given for 100 dollars with interest, and 6 dollars be paid at the end of each year for 4 years, which is endorsed on the note. Now the interest of the principal for this time is 24 dollars, just equal to the sum of the payments; but by this method the several payments all draw interest from the times they are made, the first 3 years, the second 2, and the third 1,-1.08+72+36 -82.16, which goes towards paying the principal, and in this way any debt would in time be extinguished by the payment of the interest annually.

II. Compute the interest up to the time of the first payment, and if the payment exceed the interest, deduct the excess from the principal, and cast the interest on the remainder up to the second payment, and so on. If the payment be less than the interest, place it by itself, and cast the interest up to the next payment, and so on till the payments exceed the interests, then deduct the excess from the principal, and proceed as before. By this method the interest is supposed to be always due whenever a payment is made; and although, on that account, it is not always perfectly correct, it is perhaps sufficiently so for common use. This method is extensively used, and is established by law in Massachusetts.

III. If the contract be for the payment of interest annually, the interest becomes due at the end of each year, and if it be not extinguished by payment, interest is to be cast upon that interest, from the time it becomes due up to the time of payment. If the contract be for a sum payable at a specified time, no interest is due till the time of payment arrives, and endorsements made before that time, are to be applied exclusively to the principal. After the debt falls due, the interest is to be extinguished annually, if the payments are sufficient for that purpose.

These last are the principles upon which interest is aliowed by the courts of law in Vermont, and upon these are founded the two following rules:

RULE 1. When the contract is for the payment of interest annually, and no payments have been made, find the interest of the principal for each year, separately, up to the time of payment; then find the interest of these interests, severally, from the time they become due up to the time of payment, and the sum of all the interests added to the principal will be the amount : but if payments have been made, find the amount of the principal, and also the amount of the payments to the end of the first year; subtract the latter amount from the former, and the remainder will be the principal for the second year; proceed in the same way from year to year up to the time of payment.

NOTE. It will sometimes happen that, when a note has endorsements. there will be years in which no payments are made; for which years the interest is to be found by the former part of the rule; and also when the amount of the payment is less than the interest of the principal, subtract the amount from that interest, and find the amount of the remainder up to the final payment.

QUESTIONS FOR PRACTICE.

1. A's note to B for 100 dollars, with interest annually, at 6 per cent. was dated Jan. 1, 1820; what was due, principal and interest, Jan. 1, 1824?

1st year. $100.06=$6 Int.

1 44

3

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100.06 6 "6x18-1.08
100.066 "6x.12.72

100X.06= 6 "6.06 .36

Principal 100.

$24 Int,

Int. of prin. 24.
Int. of int. 2.16

Amount $126.16 Ans.

At the end of the first year, one year's interest, 6 dollars, is due, but as it is not paid, it draws in

$2.16 Int. terest for the three following years $1.08. At the end of the second year, another year's interest is due, which draws interest for two years; and so on.

2. B's note to C for 50 dollars, with interest annually, was dated Nov. 20, 1822, on the back of which were the following endorsements, viz. May 20. 1823, received 14 dollars, and Feb. 26, 1824, 30 dollars; what was due Jan. 2, 1825?

Prin. $50 Pay't. $14

Prin. $38.58

Pay't. $30

.06

.03

.06

0.44 Prin. 9.574

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3. D's note to E for $1000, with interest annually, was dated May 5, 1822, on which the following payments were made, viz. Nov, 17, 1822, 300 dollars; April 23, 1823, 50 dollars, and | August 11, 1823, 520 dollars; | What was due June 5, 1824? Ans. $201.713.

lars, with interest annually, 4. C's note to D for 200 dolwas dated June 15, 1821, on the back of which was endorsed, Sept. 15, 1821, 4 dollars, and Jan. 21, 1823, 15 dollars; what was due June 15, 1824 ? Ans. $217.224.

RULE II. When the contract is for a sum payable at a specified time, with interest, and payments are made before the debt becomes due; find the interest of the principal up to the first payment, and set it aside; subtract the payment from the principal, and find the interest of the remainder up to the next payment, which interest set aside with the former, and so on up to the time the debt becomes due; and the sum of the interests added to the last principal, will be the amount due at that time; after the debt falls due, the interest is to be extinguished annually, if the payments are sufficient for that purpose.

QUESTIONS FOR PRACTICE.

1. E's note to F for $75.25, payable in 2 years, with interest, was dated May 1, 1822, on which was endorsed, Jan. 13, 1823, $25.25; what was due May 1, 1824?

year. mo. days.

1823 0 13

1822 4 1

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1st prin. 75.25×<.042=$3.16 int. pay't. 25.25

2d prin. 50.00<.078=3.90 int.

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7.06

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dated Dec. 3, 1817, payable 3. G's note of $365.37 was Sept. 11, 1820; June 7, 1820, he paid 97 dolls. 16 cts.; what was due when the time of payment arrived?

Ans. 327 dolls. 46 cts.

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These last are the principles upon which interest is aliowed by the courts of law in Vermont, and upon these are founded the two following rules:

RULE 1. When the contract is for the payment of interest annually, and no payments have been made, find the interest of the principal for each year, separately, up to the time of payment; then find the interest of these interests, severally, from the time they become due up to the time of payment, and the sum of all the interests added to the principal will be the amount : but if payments have been made, find the amount of the principal, and also the amount of the payments to the end of the first year; subtract the latter amount from the former, and the remainder will be the principal for the second year; proceed in the same way from year to year up to the time of payment.

NOTE. It will sometimes happen that, when a note has endorsements, there will be years in which no payments are made; for which years the interest is to be found by the former part of the rule; and also when the amount of the payment is less than the interest of the principal, subtract the amount from that interest, and find the amount of the remainder up to the final payment.

QUESTIONS FOR PRACTICE.

1. A's note to B for 100 dollars, with interest annually, at 6 per cent, was dated Jan. 1, 1820; what was due, principal and interest, Jan. 1, 1824 ?

1st year. $100.06=$6 Int.

46

100.06 6 "6x18=1.08
100.06= 6

1

3

4

66 100.066

Principal 100. $24 Int,

Int. of prin. 24.

Int. of int. 2.16

Amount $126.16 Ans.

"6x.12·72

"6.06=.36

At the end of the first year, one year's interest, 6 dollars, is due, but as it is not paid, it draws in$2.16 Int. terest for the three following years $1.08. At the end of the second year, another year's interest is due, which draws interest for two years; and so on.

2. B's note to C for 50 dollars, with interest annually, was dated Nov. 20, 1822, on the back of which were the following endorsements, viz. May 20, 1823, received 14 dollars, and Feb. 26, 1824, 30 dollars; what was due Jan. 2, 1825?

Prin. $50 Pay't. $14 Prin. $38.58

Pay'. $30

.06

.03

.06

0.44 Prin. 9.574 .007

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RULE II. When the contract is for a sum payable at a specified time, with interest, and payments are made before the debt becomes due; find the interest of the principal up to the first payment, and set it aside; subtract the payment from the principal, and find the interest of the remainder up to the next payment, which interest set aside with the former, and so on up to the time the debt becomes due; and the sum of the interests added to the last principal, will be the amount due at that time; after the debt falls due, the interest is to be extinguished annually, if the payments are sufficient for that purpose.

QUESTIONS FOR PRACTICE.

1. E's note to F for $75.25, payable in 2 years, with interest, was dated May 1, 1822, on which was endorsed, Jan. 13, 1823, $25.25; what was due May 1, 1824?

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