Ray's New Practical Arithmetic · Arts. 181–183 · Unit 17: Interest
85. Interest: the words, and interest for years
Goal: Your child knows principal, interest, amount and promissory note, and finds the interest and amount for one or more whole years.
You'll need
- Paper and pencil, or a slate or small whiteboard
What's in the book
Page 219 defines Interest (Art. 181) and prints a sample promissory note. Page 220 has a table of legal rates by state. Page 221 defines usury and Simple Interest (Art. 182) and starts Case I (Art. 183). Pages 222–224 work interest for one year and for several years, with problems.
The lesson, step by step
Warm-up
Ask: If you lend a friend $10 and they give back $11 a year later, what was the extra $1 for?
The words
Interest is money paid for the use of money.
The principal is the money for the use of which interest is paid.
The amount is the sum of the principal and interest.
A promissory note is a written promise to pay a certain sum of money at a specified time.
Look at the sample note on page 219 together.
Old customs note
The table on page 220 lists the legal interest rates state by state in 1877, often 6% to 10%.
Usury is charging interest at a per cent greater than that allowed by law.
Also:
Simple interest is not due and can not be collected till the principal is due.
Work the book's examples
Find the amount of $215 for 1 yr., at 6%.
6% of $215 is $12.90; the amount is $227.90.
Find the interest of $50 for 3 yr., at 7%.
One year is $3.50; three years is $10.50.
The rules: "Multiply the principal by the rate" for one year, then multiply by the number of years.
Rounding the way the book does
In business, it is customary to take the final result to the nearest unit.
Ray's example: 57 cents 9 mills and 3 tenths of a mill are nearest 58 cents. (A mill is a tenth of a cent.)
Guided practice and independent work
Do these two together:
Of $200 for 1 yr., at 8%.
Of $65 for 4 yr., at 5%.
Then your child works the "Find the interest" and "Find the amount" problems on pages 222–224. The book prints the answer at the end of each problem line. Have your child cover the answers with a strip of paper, work the problem, then slide the strip down to check.
Mental-math wrap-up
Aloud: interest on $100 for 1 yr. at 6%; on $50 for 2 yr. at 10%; amount of $200 for 1 yr. at 5%.