This section is from "The American Cyclopaedia", by George Ripley And Charles A. Dana. Also available from Amazon: The New American Cyclopędia. 16 volumes complete..

**Discount,** a sum of money deducted from a debt due at some future period, in consideration of immediate payment. In commercial transactions it is customary, when a bill is to be discounted, to pay to the holder or presenter the amount minus the simple interest calculated for the time the bill has to run. Thus a person holding a bill for $100 payable in one year at 7 per cent. would receive $93, which would be considered its present value. The true discount, however, of any sum for any given time, is such a sum as will in that time amount to the interest of the sum to be discounted. Thus, in the above instance, the sum to be deducted from the bill would be, not $7, but $6 54 and a fraction, which would amount at the end of a year to $7. The true rule for computing discount would therefore be: As the amount of $100 for the given rate and time is to the given sum or debt, so is $100 to the present worth; or, so is the interest of $100 for the given time to the discount of the given sum. Elaborate tables have been calculated on this principle, but as abatement of the simple interest is generally resorted to, they are of little practical value. - Discount on merchandise, sometimes called rebate, is a deduction from the price of goods sold on credit, when the buyer finds means to make his payment before the stipulated time.

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