Business, 11.05.2021 15:40, pamelaacuna

Evaluating Alternative Notes A borrower has two alternatives for a loan: (1) issue a $540,000, 90-day, 9% note or (2) issue a $540,000, 90-day note that the creditor discounts at 9%. Assume a 360-day year.
a. Calculate the amount of the interest expense for each option.
b. Determine the proceeds received by the borrower in each situation.
(1) $540,000, 90-day, 9% interest-bearing note
(2) $540,000, 90-day note discounted at 9%
c. Alternative___is more favorable to the borrower since the effective interest rate on alternative 1 isand the effective rate on alternative 2 is.

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Evaluating Alternative Notes A borrower has two alternatives for a loan: (1) issue a $540,000, 90-d...