Discharging

a contract. The act of making a contract null. ' Discount. The amount taken off; allowance for prompt - ° payment; interest deducted or collected in advance. A promi ory note is discounted when the lender on it deducts (or collects) the amount of the interest on the note at the time he advances money on it. A bill of exchange (draft) is discounted when the purchaser buys it for le than its face value; the discount is the difference between the face value of the draft and the amount paid for it. In discounting interest-bearing paper the interest should first be charged on the face amount of the paper and then credited on the amount of the discount. Illustration: At 6 per cent the discount on paper for $10,000 having one year to run is $600, but as this $600 is not paid over interest has to be allowed on it by the lender at the same rate as is charged by the lender on the whole $10,000. The interest on the $600 amounts to $36 which would, therefore, make the sum received by the maker of the paper $9,436. When non-interest-bearing paper is discounted the discount is the difference. between the face value of the note (the amount which is to be paid at maturity) and the amount paid for the note.