Ray's New Practical Arithmetic · Arts. 200–201 · Unit 19: Exchange
96. Drafts and domestic exchange
Goal: Your child knows what a draft is and finds the cost or face of a draft at a premium or a discount.
You'll need
- Paper and pencil, or a slate or small whiteboard
What's in the book
Page 260 defines exchange (Art. 200) and prints a sample draft. Page 261 describes foreign bills and gives Art. 201 with the first problems, and page 262 has more domestic exchange problems with printed answers.
The lesson, step by step
Warm-up
Ask: How could a merchant in Cincinnati pay a bill in New York in 1877 without sending coins by mail?
The idea
A draft, or bill of exchange, is a written order, from one person to another, for a certain amount of money.
Exchange is the method of making a payment by means of a draft, or bill of exchange.
Domestic exchange takes place between localities in the same country.
Look at the sample draft on page 260. It is much like a check.
Premium and discount
A draft on a distant city might cost a little more than its face (at a premium) or a little less (at a discount). Which one depended on where money was needed. The face is the base, as in stock problems.
Work an example together
What is the cost of a sight draft on New York for $1400, at ½% premium?
$1400 + ½% of $1400 = $1407.
Guided practice
Do these together:
What is the cost of a sight draft on Boston, for $2580, at ½% discount?
What is the cost of a sight draft on Chicago, for $2785, at ¼% discount?
Independent practice and check
Your child works the remaining problems on page 262. Problems 6–8 are time drafts, which also take off interest for the days until payment. Do them only if your child is confident. 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.