Ray's New Practical Arithmetic · Arts. 194–195 · Unit 18: Discount
93. Discount, bank notes and days of grace
Goal: Your child knows what discount is, reads the kinds of notes, and finds when a note matures, counting three days of grace.
You'll need
- Paper and pencil, or a slate or small whiteboard
What's in the book
Page 247 defines Discount (Art. 194) and Bank Discount (Art. 195) and prints an accommodation note. Page 248 shows business notes, negotiable and not. Page 249 explains maturity, days of grace and proceeds.
The lesson, step by step
Warm-up
Ask: If a bank lends you $100 for a year at 6% but takes the $6 off at the start, how much do you actually get?
The idea
Discount is interest paid in advance.
There are two kinds of discount, Bank Discount and True Discount.
The bank discount is simple interest taken in advance.
The proceeds is the money received on the note.
Kinds of notes
Look at the sample notes on pages 247–248 together.
A negotiable note is one that can be bought and sold.
The words 'or order' make this note negotiable.
The words 'or bearer' make this note negotiable without indorsement.
Days of grace (old custom)
A note matures, or is legally due, three days after the specified time.
The three days after the specified time are called days of grace.
To find when a note matures:
Count the days from the date of the note and add three days.
or, when the time is in months:
Count the months from the date and add three days.
Days of grace are not used for ordinary notes today, but every bank problem in Ray uses them.
Guided practice
Together, find when these mature: a 60-day note dated June 25 (count to August 24, add 3: August 27); a 3-month note dated October 20 (January 20, add 3: January 23).
Mental-math wrap-up
Aloud: a 30-day note dated March 1 matures when? A 2-month note dated May 10?
Tip
Have a calendar handy. Counting days across months is the hardest part for most children.