ABSTRACT
In practice any fraction of an interest period is computed at the corresponding fraction of the rate, although theoretically this is not quite just. All the calculations of finance depend upon compound interest, which is the only rational and consistent method. The Amount is the principal and interest taken together. At the end of the first period the amount of $1.00 at 3% interest is $1.03. Instead of considering the $1.00 and the 3 cents as two separate sums to be added together, it is best to consider the operation as the single one of multiplying $1.00 by the ratio 1.03. When the author have occasion to speak of the interest for one period he shall call it “single interest.” Compound discount does not bear any such direct relation to compound interest as single discount does to single interest. It can only be found by first ascertaining the present worth and then subtracting that from 1.
