business-accounting question. thanks A borrower has two alternatives for a loan: (a) issue a $480,000,...
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business-accounting question. thanks
A borrower has two alternatives for a loan: (a) issue a $480,000, 60-day, 8% note or (2) issue a $520,000, 120-day note that the creditor discounts at 12%. (Assume a 360-day year is used for interest calculations.) Required:
| (1) | Calculate the amount of the interest expense for each option. |
| (2) | Determine the proceeds received by the borrower in each situation. |
| (3) | Which alternative is more favorable to the lender? Explain. |
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