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7 Applications of Simple Interest
Exercise 7.1
Basic Problems
1. Period Balance No. of
(inclusive) in account days Interest earned
17
Sept. 1-17 $2800 17 $2800(0.0105) = $1.369
365
13
Sept. 18-30 $3500 13 $3500(0.0105) = $1.309
365
Interest earned in September = $2.68

 91 
2. I = Prt = $15,000(.009)   = $33.66
 365 
  120 
3. a. Maturity value, S = P(1 + rt) = $15,000 1 + 0.0125  = $15,061.64
  365 
  90 
b. Maturity value = $15,061.64 1 + 0.0115  = $15,104.35
  365 

Intermediate Problems
4. The 59-day term deposit option will have a maturity value of
  59 
S = P(1 + rt) = $12,000 1 + 0.0035  = $12,006.79
  365 
The 60-day term deposit option will have a maturity value of
  60 
S = P(1 + rt) = $12,000 1 + 0.005  = $12,009.86
  365 
By choosing the 60-day term deposit, Janette will earn $12,009.86 – $12,006.79 = $3.07
more than the 59-day term deposit.
5. If she invests in the non-redeemable GIC, Julienne will have a maturity value of:
  195 
S = P(1 + rt) = $185,000 1 + 0.01  = $185,988.36
  365 
If she invests in the redeemable GIC, Julienne will have a maturity value of
  195 
S = P(1 + rt) = $185,000 1 + 0.0075  = $185,741.27
  365 
By choosing the non-redeemable GIC, Julienne will earn
$185,988.36 – $185,741.27 = $247.09 more than the redeemable GIC.
  91 
6. Maturity amount = $20,000 1 + 0.0125  = $20,062.33
  365 
  80 
Proceeds of redemption after 80 days = $20,000 1 + 0.0055  = $20,024.11
  365 
Extra interest earned = $20,062.33 – $20,024.11 = $38.22
178 Fundamentals of Business Mathematics in Canada, 2/e
Exercise 7.1 (continued)
  364 
7. Maturity value of the 364-day GIC = $10,000 1 + 0.0145  = $10,144.60
  365 
  182 
Maturity value of the first182-day GIC = $10,000 1 + 0.0115  = $10,057.34
  365 
  182 
Maturity value of the second 182-day GIC = $10,057.34 1 + 0.0115  = $10,115.01
  365 
Therefore, the investor will earn
$10,144.60 – $10,115.01 = $29.59 more from the 364-day GIC.

8. Period Balance No. of

(inclusive) in account days Interest earned
6
Sept. 1-6 $2239 6 $2239(0.015) = $0.552
365
3
Sept. 7-9 $2973 3 $2973(0.015) = $0.367
365
11
Sept. 10-20 $2673 11 $2673(0.015) = $1.208
365
10
Sept. 21-30 $3000 10 $3000(0.015) = $1.233
365
Interest earned in September = $3.36

9. Period Amount subject

(inclusive No. of to a rate of:
of end dates) days Balance 0.25% 0.75% Interest
March 1-4 4 $1678 $1678 $0.046
March 5-14 10 978 0 0.00
March 15-22 8 3478 3000 $478 0.243 
March 23-31 9 2578 2578 0.159
Interest credited for March = $0.45
 8 
 Interest = $3000(0.0025) + $478(0.0075)   = $0.243
 365 

Advanced Problems
10. Period No. of Amount subject to a rate of:
(inclusive) days Balance 0.25% 0.5% 0.75%
April 1-9 9 $2439 $1000 $1439
April 10-22 13 3389 1000 2000 $389
April 23-30 8 2889 1000 1889
Interest earned from April 1-9 inclusive
 9 
= [$1000(0.0025) + $1439(0.005)]   = $0.239
 365 

(continued)

Chapter 7: Applications of Simple Interest 179

Exercise 7.1 (continued)
Interest earned from April 10-22 inclusive
 13 
= [$1000(0.0025) + $2000(0.005) + $389(0.0075)]   = $0.549
 365 
Interest earned from April 23-30 inclusive
 8 
=[$1000(0.0025) + $1889(0.005)]   = $0.262
 365 
Total interest for April = $0.239 + $0.549 + $0.262 = $1.05

11. Number of days from June 1 to September 1 = 30 + 31 + 31 = 92 days

The value of the term deposit on September 1
  92 
= $12,000 1 + 0.008  = $12,024.20
  365 
Date Amount in savings account
  30 
July 1 $12,000 1 + 0.0025  = $12,002.47
  365 
  31 
August 1 $12,002.47 1 + 0.0025  = $12,005.02
  365 
  31 
Sept. 1 $12,005.02 1 + 0.0025  = $12,007.57
  365 
Joan will earn $12,024.20 – $12,007.57 = $16.63 more
from the term deposit up to September 1.

  364 
12. The maturity value of a 364-day GIC = $10,000 1 + 0.01  = $10,099.73
  365 
  182 
Maturity value of the first 182-day GIC = $10,000 1 + 0.0095  = $10,047.37
  365 
If the second 182-day GIC is to have a maturity value of $10,099.73,
it must earn interest = $10,099.73 – $10,047.37 = $52.36
The interest rate that will generate this interest on the second GIC is
I $52.36
r= = = 0.01045 = 1.045%
Pt $10,047.37(182 365
)
Hence, the interest rate on the second 182-day GIC must be 1.045% in order that
Ranjit end up in the same financial position.

Checkpoint Questions (Section 7.2)

1. a. True. A higher rate of return is required in order for a smaller purchase price, P, to
be the present value of a future payment, S.
b. False. If an investor is guaranteed to receive future cash flows totalling $3000, he or
she will need to purchase that investment for less than $3000 in order to build in the
required 2% rate of return.

180 Fundamentals of Business Mathematics in Canada, 2/e

Checkpoint Questions (Section 7.2) (continued)

c. False. The fair market value increases because the smaller difference between the
purchase price and the (unchanged) future cash flows can provide the lower rate of
return.
2. We need to know:
• The amounts of the future payments;
• The dates of the future payments;
• The prevailing (or market) rate of return on similar investments.
3. Estimate the amounts and dates of the future cash flows from the investment. Decide on
the minimum rate of return you are prepared to accept from the investment. Calculate the
sum of the present values of the forecast cash flows, discounting them at the minimum
acceptable rate of return.
4. a. The fair market value will steadily increase because the time intervals in the present
value calculations become smaller (for all payments).
b. If you purchase an investment just before a payment from the investment, you are
entitled to receive that payment. If you purchase an investment just after a payment,
you are not entitled to receive that payment. Therefore, the fair market value of the
investment will drop by the amount of the payment ($500) on the date of the payment.

Exercise 7.2
Basic Problems
1. Value today = Present value of the future payment
$5250
=
1 + 0.05(12
4
)
= $5163.93
2. Value today = Present value of the future payment
$17,400
=
1 + 0.0625(12
9
)
= $16,620.90

3. Value today = Present value of payments

$500 $500
=
( )
1 + 0.09 12
3
+
( )
1 + 0.09 12
6

= $489.00 + $478.47
= $967.47
$1000 $1000
1 + 0.03(365 ) 1 + 0.03(365 )
4. Price = 60
+ 90
= $995.09 + $992.66 = $1987.75

Intermediate Problems
5. Value of certificate A = Sum of the present values of the payments.
$1000 $1000
=
( )
1 + 0.0575 12
4
+
1 + 0.0575 12
8 ( )
= $981.194 + $963.082
= $1944.28 (continued)

Chapter 7: Applications of Simple Interest 181

Exercise 7.2 (continued)

$1000 $1000
( ) ( )
Value of certificate B = +
1 + 0.0575 5
12
1 + 0.0575 12
9

= $976.60 + $958.66
= $1935.26
Since the payments from B are received a month after the respective payments
from A, certificate B is not as valuable as certificate A.
6. Value of contract today = Sum of the present values of the payments

$1500 $2000 $1000

= + +
1 + 0.105( 365 ) 1 + 0.105( 365 ) 1 + 0.105( 365
100 150 200
)
= $1458.056 + $1917.269 + $945.596
= $4320.92
7. Maximum price = Sum of the present values of the payments
$4000 $2500 $5000
1 + 0.0625(12 ) 1 + 0.0625(12 ) 1 + 0.0625(12 )
= 3
+ 6
+ 9

= $3938.462 + $2424.242 + $4776.119

= $11,138.82
8. The investment will earn interest of $2000 - $1951.62 = $48.38 over the seven month
term. The corresponding rate of return will be
I $48.38
r= = = 0.0425 = 4.25%
Pt $1951.62(12 7
)
The investment will yield 4.25% to the buyer.
9. The investment will earn interest of $9000 - $8701.26 = $298.74 over the term. The
term of the investment will be
I $298.74
t= = = 0.6666 x 12 months = 8 months
Pr $8701.26(0.0515)
The term of the investment is 8 months.

Advanced Problems
  5 
10. Payment due 2 months from now = $1800 1 + 0.05  = $1837.50
  12 
  10 
Payment due 7 months from now = $1800 1 + 0.05  = $1875.00
  12 
The price that yields a return of 10% is the present value of the payments,
discounted at 10%.

$1837.50 $1875
Price =
1 + 0.10(12 ) 1 + 0.10(12
+
)
2 7
= $1807.377 + $1771.654 = $3579.03

182 Fundamentals of Business Mathematics in Canada, 2/e

Exercise 7.2 (continued)

11. Number of days from:

March 20 to July 1 = 182 – 79 = 103 days
March 20 to September 1 = 244 – 79 = 165 days
  103 
Payment on July 1 = $3000 1 + 0.08  = $3067.73
  365 
  165 
Payment on September 1 = $5000 1 + 0.08  = $5180.82
  365 
Sale proceeds = Sum of present values of payments
$3067.73 $5180.82
1 + 0.12(365 ) 1 + 0.12(165 )
= 103
+
365

= $2967.250 + $4914.239
= $7881.49

Checkpoint Questions (Section 7.3)

1. a. False. Commerical paper is issued by corporations which will generally carry a higher
degree of risk than the Government of Canada. In order to be compensated for that
higher degree of risk, an investor will require a higher rate of return. In order to
generate a higher rate of return, an investor must pay a smaller amount, P, for the right
to receive the face value, S, of the commercial paper in the future. Therefore, the
commercial paper will sell for less than the comparable Government of Canada T-bill.
b. False. T-bills are bought and sold in the open market. Therefore, the investor who
purchases the T-bill on its issue date is not required to hold the T-bill until maturity.
c. True. If short-term rates have increased, investors will pay less because they need a
larger difference between the face value and the purchase price to provide the higher
rate of return.
d. False. Government of Canada T-bills are sold at auction on alternate Tuesdays to
institutional investors. The maximum price the investors will bid is dictated by the rate
of return that they have determined they need to earn on the investment. Therefore,
the rate of return is determined by the investors themselves through the auction
process, and not by the Government of Canada.
2. The price of the 98-day T-bill is higher because less time remains until the $100,000 face
value is received. You do not need as large a difference between the face value and the
purchase price to provide the required rate of return.
3. The fair market value will steadily rise, reaching the T-bill’s face value on the maturity date.

Exercise 7.3
Basic Problems
S $25,000
1 + 0.03672(365 )
1. Price = Present value of face value = = = $24,773.21
(1 + rt ) 91

S $100,000
1 + 0.00932(365 )
2. Price = = = $99,770.72
(1 + rt ) 90

Chapter 7: Applications of Simple Interest 183

Exercise 7.3 (continued)

3. Term Price
30 days $100,000
1 + 0.035(365 )
30
= $99,713.15

60 days $100,000
1 + 0.035(365 )
60
= $99,427.95

90 days $100,000
1 + 0.035(365 )
90
= $99,144.37

The longer the term of the commercial paper issue, the lower
the price paid on the issue date.

4. Effectively, the interest earned by the buyer will be

I = S – P = $100,000 – $99,250 = $750
The corresponding rate of return will be
I $750
( )
r= = 90
= 0.03065 = 3.065%
Pt $99,250 365
The investment will yield 3.065% to the buyer.
5. Effectively, the interest earned by the buyer will be
I = S – P = $100,000 – $99,760 = $240
The corresponding rate of return will be
I $240
$99,760(365 )
r= = 60
= 0.01464 = 1.464%
Pt
The investment will yield 1.464% to the buyer.
Intermediate Problems
6. Time remaining until maturity = 91 – 37 = 54 days
$100,000
1 + 0.0114(365 )
Selling price = 54
= $99,831.63

7. Time remaining until maturity = 62 days

S $1,000,000
(1 + rt ) 1 + 0.0210(365 )
Price = Present value of face value = = 62
= $996,445.56

8. Time remaining
until maturity Price
$100,000
 $99,258
91 days
( )
1 + 0.03 365
91

$100,000
 $99,501
61 days
( )
1 + 0.03 365
61

$100,000
 $99,746
31 days
( )
1 + 0.03 365
31

$100,000
 $99,992
1 day
( )
1 + 0.03 365
1

As time passes, a T-bill's price rises (finally reaching its face value on the maturity date).

184 Fundamentals of Business Mathematics in Canada, 2/e

Exercise 7.3 (continued)
$100,000
9. Price at the February 2010 discount rate = = $99,958.10
1 + 0.0017(365
90
)
$100,000
1 + 0.2082(365 )
Price at the August 1981 discount rate = 90
= $95,116.98

You would have paid $99,958.10 – $95,116.98 = $4841.12 more at the lower rate.
10. Time remaining until maturity = 90 – 27 = 63 days
$300,000
1 + 0.0215(365 )
Selling price = 63
= $298,890.83

Advanced Problems
11. a. The interest effectively earned if held until maturity is
I = S – P = $25,000 – $24,610 = $390
The corresponding rate of return is
I $390
( )
r= = = 0.03178 = 3.178%
Pt $24,610 182
365

b. The interest effectively earned during the final 122 days was
I = $25,000 – $24,750 = $250
The rate of return required by the market was
$250
( )
r= = 0.03022 = 3.022%
$24,750 122
365
c. The original investor earned $24,750 – $24,610 = $140 on a $24,610 investment for
60 days. The rate of return was
I $140
( )
r= = 60
= 0.03461 = 3.461%
Pt $24,610 365
$100,000
1 + 0.021(168 )
12. a. Purchase price = = $99,042.68
365
$100,000
1 + 0.024(365 )
b. (i) Market value = 83
= $99,457.21

$100,000
1 + 0.021(365 )
(ii) Market value = 83
= $99,524.74

$100,000
1 + 0.018(365 )
(iii) Market value = 83
= $99,592.35

c. The amount earned in each case was:

(i) I = S – P = $99,457.21 – $99,042.68 = $414.53
(ii) I = S – P = $99,524.74 – $99,042.68 = $482.06
(iii) I = S – P = $99,592.35 – $99,042.68 = $549.67
The rate of return actually realized in each case was:
I $414.53
$99,042.68(365 )
(i) r= = 85
= 0.01797 = 1.797%
Pt
$482.06
$99,042.68(365 )
(ii) r= 85
= 0.02090 = 2.090%

$549.67
$99,042.68(365 )
(iii) r= 85
= 0.02383 = 2.383%

Chapter 7: Applications of Simple Interest 185

Exercise 7.3 (continued)
13. If purchased for $99,000, the T-bill will effectively pay $1000 interest when it matures
at $100,000. The time remaining until maturity (when the T-bill will have a market value
of $99,000) is
I $1000
t= = = 0.24107 year = 0.24107  365 days = 88 days
Pr $99,000(0.0419)
The T-bill's price will first exceed $99,000 88 days before its maturity date.

Exercise 7.4
Intermediate Problems
Revolving Demand Loans
1. Number Interest Accrued Payment Principal
Date of days rate Interest interest (Advance) portion Balance
12-Jun -- -- -- -- -- $65,000
30-Jun 18 6.25% $200.34 $200.34 ($10,000) ($10,000) 75,000
3-Jul 3 6.25 38.53 238.87 75,000
12-Jul 9 6.50 120.21 359.08 359.08 75,000
29-Jul 17 6.50 227.05 227.05 75,000
12-Aug 14 7.00 201.37 428.42 428.42 75,000
The interest charges to Delta's current account were $359.08 on July 12 and $428.42
on August 12.
2. Number Interest Accrued Payment Principal
Date of days rate Interest interest (Advance) portion Balance
5-Feb -- -- -- -- ($15,000) ($15,000) $15,000
28-Feb 23 4.50% $42.53 $42.53 42.53 15,000
15-Mar 15 4.50 27.74 27.74 10,000 10,000 5000
31-Mar 16 4.50 9.86 37.60 37.60 5000
30-Apr 30 4.50 18.49 18.49 18.49 5000
1-May 1 4.50 0.62 0.62 (7000) (7000) 12,000
31-May 30 4.50 44.38 45.00 45.00 12,000
The interest charged to Dr. Robillard's account was $42.53 on February 28,
$37.60 on March 31, $18.49 on April 30, and $45.00 on May 31.

3. Number Interest Accrued Payment Principal

Date of days rate Interest interest (Advance) Portion Balance
3-Jul -- -- -- -- ($25,000) ($25,000) $25,000
20-Jul 17 5.00% $58.22 $58.22 58.22 25,000
29-Jul 9 5.00 30.82 30.82 (30,000) (30,000) 55,000
5-Aug 7 5.00 52.74 83.56 55,000
20-Aug 15 4.75 107.36 190.92 190.92 55,000
The amounts of interest charged on July 20 and August 20 were $58.22 and $190.92,
respectively.

186 Fundamentals of Business Mathematics in Canada, 2/e

Exercise 7.4 (continued)
Fixed-Payment Demand Loans

4. Number Interest Accrued Payment Principal

Date of days rate Interest interest made Portion Balance
3-Jun -- -- -- -- -- -- $5000.00
1-Jul 28 8.75% $33.56 $33.56 $1000.00 $966.44 4033.56
1-Aug 31 8.75 29.98 29.98 1000.00 970.02 3063.54
1-Sep 31 8.75 22.77 22.77 1000.00 977.23 2086.31
1-Oct 30 8.75 15.00 15.00 1000.00 985.00 1101.31
1-Nov 31 8.75 8.18 8.18 1000.00 991.82 109.49
1-Dec 30 8.75 0.79 0.79 110.28 109.49 0.00

5. Number Interest Accrued Payment Principal

Date of days rate Interest interest (Advance) portion Balance
20-Jul -- -- -- -- -- -- $7000.00
19-Aug 30 8.75% $50.34 $50.34 7000.00
1-Sep 13 9.25 23.06 73.40 $1400.00 $1326.60 5673.40
1-Oct 30 9.25 43.13 43.13 1400.00 1356.87 4316.53
1-Nov 31 9.25 33.91 33.91 1400.00 1366.09 2950.44
2-Nov 1 9.25 0.75 0.75 2950.44
1-Dec 29 9.50 22.27 23.02 1400.00 1376.98 1573.46
1-Jan 31 9.50 12.70 12.70 1400.00 1387.30 186.16
1-Feb 31 9.50 1.50 1.50 187.66 186.16 0.00

Advanced Problems
Revolving Demand Loans
6. Number Interest Accrued Payment Principal
Date of days rate Interest interest (Advance) Portion Balance
15-Sep -- -- -- -- -- -- $23,465.72
15-Oct 30 6.75% $130.19 $130.19 $707.88 $577.69 22,888.03
15-Nov 31 6.75 131.21 131.21 690.58 559.37 22,328.66
15-Dec 30 6.75 123.88 123.88 673.58 549.70 21,778.96
15-Jan 31 6.75 124.86 124.86 657.11 532.25 21,246.71

7. Number Interest Accrued Payment Principal

Date of days rate Interest interest (Advance) Portion Balance
15-Aug -- -- -- -- -- -- $3589.80
31-Aug 16 5.75% $9.05 $9.05 $300.00 $300.00 3289.80
15-Sep 15 5.75 7.77 16.82 100.00 83.18 3206.62
30-Sep 15 5.75 7.58 7.58 300.00 300.00 2906.62
11-Oct 11 5.75 5.04 12.62 2906.62
15-Oct 4 5.50 1.75 14.37 100.00 85.63 2820.99
31-Oct 16 5.50 6.80 6.80 300.00 300.00 2520.99
15-Nov 15 5.50 5.70 12.50 100.00 87.50 2433.49

Chapter 7: Applications of Simple Interest 187

Exercise 7.4 (continued)
Fixed-Payment Demand Loans

8. Number Interest Accrued Payment Principal

Date of days rate Interest interest (Advance) portion Balance
1-Apr -- -- -- -- -- -- $6000.00
1-May 30 5.25% $25.89 $25.89 $1000.00 $974.11 5025.89
1-Jun 31 5.25 22.41 22.41 1000.00 977.59 4048.30
7-Jun 6 5.25 3.49 3.49 4048.30
1-Jul 24 5.00 13.31 16.80 1000.00 983.20 3065.10
1-Aug 31 5.00 13.02 13.02 1000.00 986.98 2078.12
27-Aug 26 5.00 7.40 7.40 2078.12
1-Sep 5 5.25 1.49 8.89 1000.00 991.11 1087.01
1-Oct 30 5.25 4.69 4.69 1000.00 995.31 91.70
1-Nov 31 5.25 0.41 0.41 92.11 91.70 0.00
Total of the interest charges = $92.11

9. Number Interest Accrued Payment Principal

Date of days rate Interest interest (Advance) portion Balance
13-Sep -- -- -- -- -- -- $15,000.00
20-Oct 37 9.00% $136.85 $136.85 $700.00 $563.15 14,436.85
20-Nov 31 9.00 110.35 110.35 700.00 589.65 13,847.20
26-Nov 6 9.00 20.49 20.49 13,847.20
20-Dec 24 8.75 79.67 100.16 700.00 599.84 13,247.36
20-Jan 31 8.75 98.45 98.45 700.00 601.55 12,645.81
29-Jan 9 8.75 27.28 27.28 12,645.81
20-Feb 22 9.25 70.50 97.78 700.00 602.22 12,043.59

Exercise 7.5
Intermediate Problems
1. Number of days from June 1 to September 3 = 246 – 152 = 94
Number of days from Sept. 3 to (and including) Nov. 30 = 334 + 1 – 246 = 89
Interest accrued during the 6-month grace period
= $9400(0.0625) + $9400(0.06)
94 89
= $288.82
365 365

Number Interest Accrued Payment Principal

Date of days rate Interest interest (Advance) Portion Balance
1-Dec --- --- --- --- --- --- $9688.82
31-Dec 30 6.00% $47.78 $47.78 $135.00 $87.22 9601.60
17-Jan 17 6.00 26.83 26.83 0.00 9601.60
31-Jan 14 6.25 23.02 49.85 135.00 85.15 9516.45
28-Feb 28 6.25 45.63 45.63 135.00 89.37 9427.08

188 Fundamentals of Business Mathematics in Canada, 2/e

Exercise 7.5 (continued)
2. Number Interest Accrued Payment Principal
Date of days rate Interest interest (Advance) portion Balance
1-Jul --- --- --- --- --- --- $3800.00
31-Jul 30 10.50% $32.79 $32.79 $60.00 $27.21 3772.79
31-Aug 31 10.50 33.65 33.65 60.00 26.35 3746.44
30-Sep 30 10.50 32.33 32.33 60.00 27.67 3718.77

3. a. Number of days from January 1 to March 29 = 88 – 1 = 87

Number of days from March 29 to (and including) June 30 = 181 + 1 – 88 = 94
Interest accrued during the 6-month grace period
= $5800(0.065) + $5800(0.07)
87 94
= $194.42
365 365
b. Number Interest Accrued Payment Principal
Date of days rate Interest interest (Advance) portion Balance
1-Jul --- --- --- --- --- --- $5800.00
31-Jul 30 9.50% $45.29 $45.29 $95.00 $49.71 5750.29
31-Aug 31 9.50 46.40 46.40 95.00 48.60 5701.69
30-Sep 30 9.50 44.52 44.52 95.00 50.48 5651.21
Total interest in first 3 payments = $136.21

Advanced Problems

4. Number of days from July 1 to September 22 = 265 – 182 = 83

Number of days from Sept. 22 to (and including) Dec. 31 = 365 + 1 – 265 = 101
Interest accrued during the 6-month grace period
= $6800(0.075) + $6800(0.0725)
83 101
= $252.39
365 365
Number Interest Accrued Payment Principal
Date of days rate Interest interest (Advance) portion Balance
1-Jan --- --- --- --- --- --- $7052.39
31-Jan 30 7.25% $42.02 $42.02 $200.00 $157.98 6894.41
28-Feb 28 7.25 38.34 38.34 200.00 161.66 6732.75
2-Mar 2 7.25 2.67 2.67 6732.75
25-Mar 23 6.75 28.64 31.31 500.00 500.00 6232.75
31-Mar 6 6.75 6.92 38.23 200.00 161.77 6070.98

5. Number of days from June 1 to (and including) Nov. 30 = 334 + 1 – 152 = 183
Interest accrued during the 6-month grace period
= $5200(0.0575)
183
= $149.91
365
Number Interest Accrued Payment Principal
Date of days rate Interest interest (Advance) portion Balance
1-Dec --- --- --- --- --- --- $5349.91
31-Dec 30 5.75% $25.28 $25.28 $110.00 $84.72 5265.19
31-Jan 31 5.75 25.71 25.71 110.00 84.29 5180.90
14-Feb 14 5.50 10.93 10.93 300.00 300.00 4880.90
28-Feb 14 5.50 10.30 21.23 110.00 88.77 4792.13

Chapter 7: Applications of Simple Interest 189

Review Problems
Basic Problems

1. Period Balance No. of

(inclusive) in account days Interest earned
7
May 1-7 $1834.38 7 $1834.38(0.0185) = $0.651
365
24
May 8-31 $2400.00 24 $2400.00(0.0185) =$2.919
365
Interest earned in May = $3.57

S $27,500
(1 + rt ) 1 + 0.0425(128 )
2. Price = = = $26,742.30

S $50,000
( )
3. Price = = = $49,472.95
(1 + rt ) 1 + 0.04273 365
91

4. The earnings from the certificate will be

I = S – P = $100,000 – $98,950 = $1050
The corresponding annual rate of return is
I $1050
( )
r= = 90
= 0.04304 = 4.304%
Pt $98,950 365
The investment will yield the buyer 4.304%.
 91 
5. I =Prt = $65,000(0.0115)  = $186.36
 365 
  120 
6. S = P(1 + rt) = $55001 + 0.0275  = $5549.73
  365 

Intermediate Problems
7. The maximum price will be the sum of the present values of the payments discounted at
the minimum required rate of return. That is,
$4500 $3000 $5500
1 + 0.055(12 ) 1 + 0.055(12 ) 1 + 0.055(1)
Price = 4
+ 8
+

= $4418.985 + $2893.891 + $5213.270

= $12,526.15
The highest price the investor should pay is $12,526.15.
8. Period No. of Amount subject to a rate of:
(inclusive) days Balance 1.00% 1.75% 2.25%
Jan. 1-13 13 $3678 $1000 $2000 $678
Jan. 14-24 11 878 878
Jan. 25-31 7 1828 1000 828
I (Jan. 1-13) = $1000(0.01 ) + $2000 (0.0175 ) + $678(0.022 5) (365
13 )
= $2.146
11 = $0.265
I (Jan. 14-24) = $878(0.01) 365
I (Jan. 25-31) = $1000(0.01 ) + $828 (0.0175 ) (365
7 ) = $0.470

Total interest for January = $2.146 + $0.265 + $0.470 = $2.88

190 Fundamentals of Business Mathematics in Canada, 2/e

Review Problems (continued)
9. Time remaining until maturity = 182 – 66 = 116 days
$100,000
1 + 0.0248(116 )
Price = = $99,218.00
365

10. Number Interest Accrued Payment Principal

Date of days rate Interest interest (Advance) portion Balance
8-Mar -- -- -- -- ($40,000) ($40,000) $40,000
24-Mar 16 5.25% $92.05 $92.05 $92.05 40,000
2-Apr 9 5.25 51.78 51.78 (15,000.00) (15,000) 55,000
24-Apr 22 5.25 174.04 225.82 225.82 55,000
13-May 19 5.25 150.31 150.31 55,000
24-May 11 5.50 91.16 241.47 241.47 55,000
5-Jun 12 5.50 99.45 99.45 25,000.00 25,000 30,000
24-Jun 19 5.50 85.89 185.34 185.34 30,000
The first four interest deductions were $92.05, $225.82, $241.47, and $185.34.

11. Number Interest Accrued Payment Principal

Date of days rate Interest interest (Advance) portion Balance
23-May --- --- --- --- --- --- $15,000.00
15-Jun 23 6.50% $61.44 $61.44 $700.00 $638.56 14,361.44
15-Jul 30 6.50% 76.73 76.73 700.00 623.27 13,738.17
26-Jul 11 6.50% 26.91 26.91 13,738.17
15-Aug 20 6.25% 47.05 73.96 700.00 626.04 13,112.13
14-Sep 30 6.25% 67.36 67.36 13,112.13
15-Sep 1 6.75% 2.42 69.78 700.00 630.22 12,481.91

12. Number of days from May 1 to July 9 = 190 – 121 = 69

Number of days from July 9 to (and including) Oct. 31 = 304 + 1 – 190 = 115
Interest accrued during the 6-month grace period
= $7200(0.06) + $7200(0.0575)
69 115
= $212.10
365 365
Number Interest Accrued Payment Principal
Date of days rate Interest interest (Advance) portion Balance
1-Nov --- --- --- --- --- --- $7412.10
30-Nov 29 5.75% $33.86 $33.86 $120.00 $86.14 7325.96
13-Dec 13 5.75 15.00 15.00 7325.96
31-Dec 18 5.50 19.87 34.87 120.00 85.13 7240.83
31-Jan 31 5.50 33.82 33.82 120.00 86.18 7154.65

Chapter 7: Applications of Simple Interest 191

Review Problems (continued)
Advanced Problems
  180 
13. Maturity value of the 180-day GIC = $20,000 1 + 0.015  = $20,147.95
  365 
  90 
Maturity value of the first 90-day GIC = $20,000 1 + 0.013  = $20,064.11
  365 
  90 
Maturity value of the second 90-day GIC = $20,064.11 1 + 0.013  = $20,128.43
  365 
Therefore, Paul will earn $20,147.95 – $20,128.43 = $19.52 more
by purchasing the 180-day GIC.

14. Suppose that the amount invested is $1000. Its maturity value in a 120-day GIC will be
  120 
$1000 1 + 0.0175  = $1005.75
  365 
If instead, the $1000 is invested in a 60-day GIC,
  60 
Maturity value = $1000 1 + 0.015  =$1002.47
  365 
For this amount to grow to $1005.75 in another 60 days, it must earn
Interest = $1005.75 – $1002.47 = $3.28
The interest rate on the second 60-day GIC would have to be
I $3.28
$1002.47(365 )
r= = 60
= 0.01990 = 1.990%
Pt

15. Size of the first payment = P(1 + rt) = $1900 1+ 0.105(12
3
) = $1949.88
Size of the second payment = $1900 1+ 0.105(12
6
) = $1999.75
Price = Sum of present values of the payments (discounted at 16%)
$1949.88 $1999.75
1 + 0.16(12 ) 1 + 0.16(12 )
= 2
+ 5

= $1899.234 + $1874.766
= $3774.00
The finance company should pay $3774.00 if it requires an 16% rate of return.

S $25,000
( )
16. a. Price = = = $24,665.59
(1 + rt ) 1 + 0.05438 365
91

b. Time left until maturity = 91 – 34 = 57 days

The amount earned by the second investor will be
I = S – P = $25,000 – $24,775 = $225
This will provide a rate of return of
I $225
( )
r= = 57
= 0.05815 = 5.815%
Pt $24,775 365

(continued)

192 Fundamentals of Business Mathematics in Canada, 2/e

Review Problems (continued)

16. c. During his 34-day holding period, the first investor earned
I = S – P = $24,775 – $24,665.59 = $109.41
This amount provided a rate of return of
I $109.41
( )
r= = 34
= 0.04762 = 4.762%
Pt $24,665.59 365

17. Number Interest Accrued Payment Principal

Date of days rate Interest interest (Advance) Portion Balance
3-Jun -- -- -- -- ($50,000) ($50,000) $50,000
26-Jun 23 9.00% $283.56 $283.56 $283.56 50,000
30-Jun 4 9.00 49.32 49.32 (40,000) (40,000) 90,000
5-Jul 5 9.00 110.96 160.28 90,000
17-Jul 12 9.25 273.70 433.98 (25,000) (25,000) 115,000
26-Jul 9 9.25 262.29 696.27 696.27 115,000
31-Jul 5 9.50 149.66 149.66 30,000 30,000 85,000
18-Aug 18 9.50 398.22 547.88 35,000 35,000 50,000
26-Aug 8 9.50 104.11 651.99 651.99 50,000

18. Number Interest Accrued Payment Principal

Date of days rate Interest interest (Advance) portion Balance
28-Jan -- -- -- -- -- -- $4000.00
21-Feb 24 3.75% $9.86 $9.86 $600.00 $590.14 3409.86
21-Mar 28 3.75 9.81 9.81 600.00 590.19 2819.67
21-Apr 31 3.75 8.98 8.98 600.00 591.02 2228.65
15-May 24 3.75 5.50 5.50 2228.65
21-May 6 3.50 1.28 6.78 600.00 593.22 1635.43
21-Jun 31 3.50 4.86 4.86 600.00 595.14 1040.29
5-Jul 14 3.50 1.40 1.40 1040.29
21-Jul 16 3.25 1.48 2.88 600.00 597.12 443.17
21-Aug 31 3.25 1.22 1.22 444.39 443.17 0.00

Exercise 7A (ON CONNECT)

Basic Problems

1. Issue date = May 19 = 139th day of the year (Table 6.2)

Legal due date = 139 + 120 + 3 = 262nd day of the year = September 19
2. Issue date = June 30 = 181st day of the year (Table 6.2)
Legal due date = 181 + 90 + 3 = 274th day of the year = October 1

3. Term = October 17 – 3 days – July 6 = 290 – 3 – 187 = 100 days

4. Term = 17 + 31 + 30 – 3 days= 75 days
5. Issue date = Feb. 28 – 3 days – 4 months = October 25

Chapter 7: Applications of Simple Interest 193

Exercise 7A (continued)
6. Issue date = October 3 – 3 days – 9 months
= September 30 – 9 months
= December 30
7. Issue date = September 2 – 3 days – 180 days
= 245 – 183
= 62nd day of the year
= March 3
8. Issue date = March 1 (leap year) – 3 days – 60 days
= (365 + 61) – 63
= Day numbered 363 of the preceding year
Hence, the issue date is December 29 of the preceding year.

Intermediate Problems

9. Interest period = August 30 + 3 days – April 30 = 242 + 3 – 120 = 125 days

  125 
Maturity value, S = P(1 + rt) = $1000 1 + 0.045  = $1015.41
  365 

  63 
10. Maturity value, S = P(1 + rt) = $3300 1 + 0.0675  = $3338.45
  365 
S $2667.57
11. Face value, P =
( )
= = $2600.00
(1 + rt ) 1 + 0.102 365
93

12. Interest period = December 3 – August 31 = 337 – 243 = 94 days

S $7644.86
Face value, P =
(365 )
= = $7500.00
(1 + rt ) 1 + 0.075 94
13. I = S – P = $6388.04 – $6200 = $188.04
I $188.04
r=
Pt
=
(365 )
$6200 123
= 0.090 = 9.00%

14. I = S – P = $4445.28 – $4350 = $95.28

I $95.28
r=
Pt
=
(365 )
$4350 78
= 0.1025 = 10.25%

15. I = S – P = $5275.22 – $5200 = $75.22

I $75.22
t= = = 0.131504 year = 48 days
Pr $5200(0.11)
Term = 48 – 3 = 45 days

16. I = S – P = $9560.62 – $9400 = $160.62

I $160.62
t= = = 0.172598 year = 63 days
Pr $9400(0.099)
Term = 63 – 3 = 60 days

194 Fundamentals of Business Mathematics in Canada, 2/e

Exercise 7A (continued)
17. Time until maturity = 50 + 3 – 9 = 44 days
S $1000
(1 + rt ) 1 + 0.05(365 )
Proceeds = = 44
= $994.01

18. Time from sale date until maturity = 64 days

S $6000
(365 )
Proceeds = = = $5906.79
(1 + rt ) 1 + 0.09 64
  185 
19. Maturity value = P(1 + rt) = $2700 1 + 0.06  = $2782.11
  365 
Time from sale date until maturity = 84 days
S $2782.11
(1 + rt ) 1 + 0.10(365 )
Proceeds = = 84
= $2719.52

20. Maturity date = October 25 + 120 + 3 days = February 25

  123 
Maturity value = $3500 1 + 0.10  = $3617.95
  365 
Time from sale date until maturity = 73 days
S $3617.95
(365 )
Proceeds = = = $3560.97
(1 + rt ) 1 + 0.08 73
  94 
21. Maturity value = P(1 + rt) = $9000 1 + 0.08  = $9185.42
  365 
Time from date of sale until maturity = 94 – 35 = 59 days
I $9185.42 − $9075.40
Discount rate, r =
Pt
=
$9075.40 59 (365 ) = 0.075 = 7.50%

  78 
22. Maturity value = P(1 + rt) = $4000 1 + 0.08  = $4068.38
  365 
Time from date of sale until maturity = 78 – 32 = 46 days
I $4068.38 − $4015.25
Discount rate, r =
Pt
=
$4015.25 46 (365 ) = 0.105 = 10.50%

23. a. Legal due date = February 28, 2015 + 3 days

= March 3, 2015
b. Legal due date = September 29, 2014 + 153 days
= 273rd day + 153 days
= (426 – 366) days into 2015
= 60th day in 2015
= March 1, 2015
24. a. Legal due date = August 30, 2015+ 3 days
= September 2, 2015
b. Legal due date = April 30, 2015+ 123 days
= 120th day + 123 days
= 243rd day
= August 31, 2015
Chapter 7: Applications of Simple Interest 195
Exercise 7A (continued)
  123 
25. Maturity value, S = P(1 + rt) = $1000 1 + 0.0475  = $1016.01
  365 
26. Legal due date = May 31 + 3 days = June 3, 2015
  154 
Maturity value = $1000 1 + 0.095  = $1040.08
  365 
27. Time from sale date until due date = 93 – 31 = 62 days
S $3300
(365 )
Fair selling price = = = $3257.12
(1 + rt ) 1 + 0.0775 62
28. Legal due date = March 30, 2015+ 3 days = April 2, 2015.
Time from sale date until maturity = 366 + 92 – 336 = 122 days.
S $3300
(1 + rt ) 1 + 0.0525(122 )
Proceeds = = = $3243.09
365

  103 
29. Maturity value = $750 1 + 0.125  = $776.46
  365 
Time from settlement date until legal due date = 103 – 26 = 77 days
$776.46
Settlement amount =
( )
1 + 0.0825 365
77
= $763.17

30. Legal due date = August 19 + 3 days = August 22

Total interest period = 234 – 139 = 95 days
  95 
Maturity value = $2700 1 + 0.04  = $2728.11
  365 
Time from June 5 to August 22 = 234 – 156 = 78 days
$2728.11
1 + 0.07(365 )
Price on June 5 = 78
= $2687.90

31. Legal due date = December 30 + 3 days = January 2

Total interest period = 365 + 2 – 181 = 186 days
  186 
Maturity value = $2900 1 + 0.08  = $3018.22
  365 
Time from September 1 to January 2 = 186 – 63 = 123 days
$3018.22
1 + 0.0475(123 )
Proceeds = = $2970.67
365

  123 
32. Maturity value = $4100 1 + 0.1025  = $4241.62
  365 
Time from purchase date until due date = 123 – 22 = 101 days
$4241.62
( )
Price = = $4105.30
1 + 0.12 365
101

196 Fundamentals of Business Mathematics in Canada, 2/e

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shown in the illustration, and detailed in the working sketches, was
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toboggan proper and the forms over which it is bent, may be
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Smoothness of finished surface, freedom from tendency to
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in the wood used to make a toboggan, three varieties may be
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softer than hickory and easily splintered, but acquires an excellent
polish on the bottom. Oak stands bending well, but does not become
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use quarter-sawed oak because of the cross-grain flakes in its
structure.
While the best toboggan is made of a single board, both the
securing of material and its construction are rather difficult. Narrow
strips are easily bent to shape, but do not make a durable article. A
toboggan made of four boards is practical. The mill bill for one 7¹⁄₂ ft.
long by 16 in. wide and for the bending frame, is as follows:
4 pieces, ⁵⁄₁₆ by 4 in. by 10 ft., hard wood.
7 „ 1 by 1 in. by 16 in., „ „
2 „ ¹⁄₂ by 1 in. by 16 in., „ „
2 „ 1 by 6 in. by 6 ft., common boards.
6 „ 1 by 2 in. by 18 in., „ „
1 cylindrical block, 12 in. diameter by 18 in. long.
 This Toboggan Is Strong and Light; It will
afford the Maker Much Pleasure Both in the
Interesting Process of Construction and in
the Use for Coasting or Transportation. It
may be Made as an Individual Project or as
a Joint Undertaking by Several Boys

The form for the bending of the pieces is made of the common
boards and the block. A block sawed from the end of a dry log is
excellent. Heat it, if convenient, just before bending the strips. The
boards for the bottom should be selected for straightness of grain
and freedom from knots and burls. Carefully plane the side intended
for the wearing surface, and bevel the edges so that, when placed
together, they form a wide “V” joint, half the depth of the boards. The
1 by 1-in. pieces are for cross cleats and should be notched on one
side, 1 in. from each end, to receive the side ropes. The two ¹⁄₂ by 1-
in. pieces are to be placed one at each side of the extreme end of
the bent portion, to reinforce it.

The Boards for the Bottom are Steamed or Boiled at the Bow Ends and Bent
over the Form. As the Bending Operation Progresses, the Boards are Nailed
to the Form with Cleats, and Permitted to Dry in This Position

Bore a gimlet hole through the centers of the 1 by 2 by 18-in

pieces, and 4¹⁄₄ in. each side of this hole, bore two others. Nail the
end of one of the 6-ft. boards to each end of the block, so that their
extended ends are parallel. With 3-in. nails, fasten one of the bored
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in. piece to hold it out that distance from the block.
Steam about 3 ft. of the ends of the boards, or boil them in a tank.
Clamp, or nail, the boards together, at the dry ends, edge to edge,
between two of the 1 by 2-in. pieces, leaving about ¹⁄₄-in. opening
between boards. Thrust the steamed ends under the cleat nailed on
the block, the nails which hold it slipping up between the boards.
Bear down on the toboggan carefully, nailing on another of the bored
cleats, when the toboggan boards have been curved around the
block as far as the floor will permit. The nails, of course, go between
the boards.
Now, turn the construction over and bend up the toboggan,
following the boards around the block with more of the nailed cleats,
until the clamped end is down between the two 6-ft. boards, where it
can be held by a piece nailed across. More of the cleats may be
nailed on if desired; in fact, the closer together the cleats are the less
danger there is of splintering the boards, and the more perfect the
conformity of the boards to the mold.
Allow at least four days for drying before removing the boards from
the form. Clamp the ¹⁄₂ by 1-in. pieces one each side of the extreme
ends of the bent bows, drill holes through, and rivet them. A 1 by 1-
in. crossbar is riveted to the inside of the bow at the extreme front
and another directly under the extremity of the curved end. These
cleats are wired together to hold the bend of the bow. The tail end
crossbar should be placed not nearer than 2¹⁄₂ in. from the end of the
boards, while the remainder of the crossbars are evenly spaced
between the front and back pieces, taking care that the notched side
is always placed down. Trim off uneven ends, scrape and sandpaper
the bottom well, and finish the toboggan with oil. Run a ³⁄₈-in. rope
through the notches under the ends of the cross pieces, and the
toboggan is completed.
Screws are satisfactory substitutes for rivets in fastening together
the parts, and wire nails, of a length to allow for about ¹⁄₄-in. clinch,
give a fair job. Indians overcome the lack of hardware by the use of
rawhide, laced through diagonally staggered holes bored through the
crosspieces and bottom boards. Rawhide, which they sometimes
stretch over the bow as a protection, affords an opportunity for
elaborate ornamentation.
 Wooden Lock with Combination Key

This Lock is Made Entirely of Wood and cannot be Picked Easily

The lock shown in the sketch and detailed drawings is made

entirely of wood, and it is nearly impossible to pick or open it without
the use of the key. The casing of the lock is 5 by 5 in. and 1 in. thick,
of hard wood, oak being suitable for this as well as for the other
parts. Three tumblers, a bolt, and a keeper are required. The key is
shown inserted, indicating how the tumblers are raised by it. The bolt
is slotted and a screw placed through it to prevent it from being
moved too far. The lock and keeper are bolted into place on a door
with carriage bolts, the heads being placed on the outer side.
The Details of Construction must be Observed Carefully and the Parts Made
Accurately to Insure Satisfactory Operation

The detailed drawing shows the parts, together with the

dimensions of each, which must be followed closely.
The lock casing is grooved with two grooves, extending the length
of the grain and connected by open mortises, all ¹⁄₂ in. in depth. The
spacing of the mortises and the grooves is shown in the views of the
casing. Three tumblers, ¹⁄₂ in. square and 2¹⁄₂ in. long, are required.
The bolt is ¹⁄₂ by 1 by 8 in., and the key ¹⁄₄ by ³⁄₄ by 5¹⁄₂ in., and
notched as shown. All the parts of the lock must be fitted carefully,
sandpapered smooth, and oiled to give a finish that will aid in the
operation, as well as protect the wood. Aside from its practical use,
this lock is interesting as a piece of mechanical construction.—B.
Francis Dashiell, Baltimore, Md.
 Variety of Uses for an Electric Iron

A milliner, in addition to using her electric iron for ordinary

purposes of ironing and pressing, inverts it between two hollow tiles
and thus makes use of it in steaming velvet trimmmings. The tiles
not only hold the iron securely in this position, but also insulate it
from overheating or scorching adjoining objects or surfaces. The iron
is also used inverted for heating water, cooking coffee, and other
liquids, as well as in providing a warm lunch.
 Renewing Dry Batteries with Sal Ammoniac

Finding that dry batteries had increased in price, and requiring a

number for experimental purposes, I devised the following method
by which I was able to use the old batteries for a considerable
period: When the dry cells were nearly exhausted, I punched holes
through the zinc covering with a nail, as shown in the sketch. The
holes were placed about 1¹⁄₂ in. apart, and care was taken not to
punch them near the upper edge of the container, or the black
insulation might thus be injured. The cells were then placed in a
saturated solution of sal ammoniac. The vessel containing the liquid
must be filled only to within ¹⁄₂ in. from the top of the cell, otherwise
the binding posts will be corroded, and the cell probably short-
circuited. The cells were left in the solution six hours, and then
became remarkably live. They must not be connected or permitted to
come into contact with each other while in the solution.—H. Sterling
Parker, Brooklyn, N. Y.
 A Sliding Board for Coasting

The simple device shown in the sketch can afford youngsters

much amusement in coasting down inclines or small hills, either on
the snow or on surfaces slightly crusted with ice. The board is
intended for individual use only and should be about 10 in. wide and
26 in. long. It is reinforced underneath by a strip of wood, about ¹⁄₄ in.
thick and smoothed on its lower side. This piece is fastened in the
form of a bow by placing a small cleat between it and the upper
piece. The strip should be about 3 in. wide, and aids in keeping the
sliding board in its course.—John F. Long, Springfield, Mo.
 Electrical Device Transmits Striking of Clock
Converting an ordinary parlor, or mantel, clock into a master clock,
from which the striking of the gong is transmitted to various parts of
the home, may be accomplished by fitting it with a simple electrical
device, as shown in the sketch. The general arrangement of the
batteries, single-stroke bells, and the contact device within the clock
case is shown in Fig. 1; a detail of the silk cord and other
connections of the contact key and the gong hammer, is shown in
Fig. 2. This arrangement has been in operation for several years,
and has been found practical.
 Fig. 1

Fig. 2
The General Arrangement of the Apparatus for Transmitting the Striking of a
Clock Gong is Shown in Fig. 1, and a Detail of the Contact Device in Fig. 2

The various rooms to which the striking of the gong is to be

transmitted are wired with No. 18 annunciator wire, run carefully
behind picture moldings and in corners. Where the wires must be
carried through a partition, a ¹⁄₄-in. hole is sufficiently large for the
purpose. The single-stroke bells are wired up as shown in the
sketch. The number of dry batteries necessary varies with the
number of bells in the circuit, and also depends on the length of wire
through which the current is carried. A trial should be made with
several batteries and more added until the bells are rung properly.
 The connecting device may be fitted into the clock case without
defacing it by boring holes in its side, and the binding posts are fixed
into place neatly. The two sections of the contact key, shown in detail
in Fig. 2, are fastened to the back of the clock case with bolts. The
upper member is fitted with an adjustable thumbscrew and is
stationary on the bolt fastening. The lower arm is made of covered
wire and is pivoted on the supporting bolt. Attached to its lower edge,
at the pivot, is a small lever arm. This is connected to the hammer
rod of the gong with a silk cord. The length of the cord must be
determined by careful adjustment so that it will not hinder the action
of the hammer H, but will bring the swinging arm into proper contact
with the thumbscrew. The contact should be made at the instant the
hammer strikes the bell. The contact of the platinum point of the
thumbscrew and the swinging arm must be close, but not too strong.
Metal posts or tubes fitted over the bolts, at the points where the
arms are attached to the back of the clock case, may be used to
bring the arms the proper distance forward in the case, so that they
will be in alinement with the hammer rod. The silk cord must not
interfere with the action of the pendulum P. To hold the silk cord in
place on the hammer rod, drop a small piece of melted sealing wax
or solder on the rod.—W. E. Day, Pittsfield, Mass.
 Antique Signboard Made of Headboard of Bed
Some old headboards of beds are of such a pattern that they lend
themselves readily for use as signboards, with only slight alteration.
Such an adaptation is shown in the sketch, and was fitted to a
bracket of ornamental iron, the whole producing a striking effect. The
sign was made of black walnut and was, by reason of its age, well
seasoned. It was treated with several coats of linseed oil to
withstand the action of the weather better.
A Signboard Which Attracts Attention was Made of the Headboard of a
Walnut Bed
 Auto Horn for Child’s Play Vehicle
A baking-powder, or other tinned, can may be used to make the
small automobile horn shown in the illustration, for use on a child’s
coaster wagon. The device consists of a toothed wheel operating
against several metal pawls within the can, and the warning sound is
produced by turning a small crank at the end of the can. The can is
fixed to the side of the vehicle by means of a wire or strap-iron
bracket, as shown in the sketch at E.

This Small Auto Horn was Made of a Tinned Can Fitted with a Notched Wheel
and Pawls