Evaluating Alternative Notes A borrower has two alternatives for a loan: (1) issue a $600,000,...
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Evaluating Alternative Notes A borrower has two alternatives for a loan: (1) issue a $600,000, 90-day, 8% note or (2) issue a $600,000, 90-day note that the creditor discounts at 8%. Assume a 360-day year. a. Calculate the amount of the interest expense for each option. $ for each alternative. b. Determine the proceeds received by the borrower in each situation. (1) $600,000, 90-day, 8% interest-bearing note $ (2) $600,000, 90-day note discounted at 8% $ c. Alternative is more favorable to the borrower because the borrower .
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