To find the cost of a draft, the face and rate per cent of exchange
being given.
RULE.--_Find the percentage of the given rate per cent of exchange and
add it to, or subtract it from the amount of draft._
EXAMPLE: What is the cost, in Chicago, of a sight draft on Denver for
$400, if exchange is 3/4% premium; and how much if 1/2% discount?
$400 × .00-3/4 = $3; $400 + $3 = $403, at 3/4% premium.
$400 × .00-1/2 = $2; $400 - $2 = $398, at 1/2% discount.
To find the face of a draft, cost and rate per cent of exchange given.
RULE.--_Divide by the cost of a draft for $1, at given rate per cent of
exchange._
EXAMPLE: Find face of draft that can be bought for $1000 at 1% premium;
at 1% discount.
$1000 ÷ 1.01 = $990.10, at 1% premium.
$1000 ÷ .99 = $1010.10, at 1% discount.
Time Drafts, when negotiated before maturity, are subject to discount
which is computed on the face of the draft, the same as interest.
EXAMPLE: What is the proceeds of a 60-day draft for $800, at 5/8%
premium, and discounted at 7%?
$805.00, face + 5/8% premium
9.33, interest (7%, 60 days)
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$795.67, proceeds. _Ans._
Foreign Drafts are usually made payable in the money of the country on
which they are drawn.
To find the equivalent of foreign money in United States money and vice
versa.
RULE.--_Multiply, or divide (as the case may require) the given sum, by
the equivalent of a unit in United States money._
EXAMPLE: What is the cost of a draft on London for £125, reckoning
exchange at $4.8665?