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THE NEW STUDENT'S  REFERENCE  WORK                                    2201

Duties are reckoned:

1.   At  a  certain per  cent on the value of the goods,  called

ad valorem duties.

2.   At a certain amount per pound, yard, etc., called specific

duties.

Certain goods are subject to both ad valorem and specific duties. Government determines by an Act of Congress the duties to be paid.

INTEREST.

Charles Adams borrowed $2500 for a year, and used it in his business. At the end of the year he paid back the money, and also paid 6 per cent of the money borrowed. How much did he pay for its use?

Henry James secured a loan from the bank of $12,000 with which to buy a tract of land. The bank agreed to loan the $12,000, on condition that Mr. James would pay the bank each year a sum of money equal to 5% of the loan. How much did Mr. James pay each year!

Money paid for the use of money is called interest.

The sum for which interest is paid is called the principal.

The sum of the principal and the interest is the amount.

Interest is reckoned at a certain per cent of the sum borrowed.

Interest at 6% means 6c on each dollar for 1 year.

The per cent of interest is called the rate of interest.

The rate of interest varies, generally from 2% to 6%.

Savings banks pay 3% or 4%. Good securities demand a low rate of interest.

George H. Brown borrows $600 of John A. Briggs and agrees to pay interest at 5%. Mr. Brown should give Mr. Briggs a written promise to pay the money.

This written promise is called a promissory note.

A PROMISSORY NOTE.

$600.                                                                 Boston, Feb. 1, 1911.

On demand I promise to pay to the order of

John A. Briggs

Six hundred                                                                            Dollars

with interest at 5%.

Value received.

GEORGE H. BROWN.