Ray's New Practical Arithmetic · Arts. 196–197 · Unit 18: Discount
94. Bank discount and proceeds
Goal: Your child finds the due date, discount and proceeds of a note, with or without interest, and finds the face of a note for given proceeds.
You'll need
- Paper and pencil, or a slate or small whiteboard
What's in the book
Page 250 gives Case I (Art. 196) with a worked $700 note and the rule; pages 251–252 have problems. Pages 252–254 cover notes that bear interest. Page 255 gives Case II (Art. 197), finding the face, with problems on pages 255–256. Answers are printed.
The lesson, step by step
Warm-up
Ask: How many days, with grace, in a 60-day note? (63.) A 90-day note? (93.)
Work the book's example
Find the date when due, bank discount, and proceeds of the following accommodation note, discounted at 6%.
The $700 note runs 60 days plus 3 of grace. The interest of $1 for 63 days at 6% is $0.0105, so the discount is $7.35. The proceeds are $700 − $7.35 = $692.65.
1. Find the interest on the face of the note for the given time; this is the bank discount. 2. From the face of the note subtract the discount; the remainder is the proceeds.
Notes that bear interest
For an interest-bearing note, the bank discounts what the note will be worth at maturity:
1. Find the amount of the note for the given time. 2. Find the bank discount and proceeds of this amount.
The time of discount runs from the day the bank buys the note to the day it matures.
Finding the face
For what sum due 90 days hence, must I give a note to a bank, that, when discounted at 6%, the proceeds will be $177.21?
The discount on $1 for 93 days is $0.0155, so $1 gives proceeds of $0.9845. Then $177.21 ÷ .9845 = $180.
Guided practice
Do these together:
A note of $100, dated June 20, payable in 60 days, and discounted at 6%.
The proceeds of a note discounted at a bank for 60 days, at 6%, were $197.90: what was the face of the note?
Independent practice and check
Your child works a selection of problems from pages 251–256. 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.