A borrower has two alternatives for a loan: (1) Issue a $75,000, 90-day, 7% note or (2)
Question:
(1) Issue a $75,000, 90-day, 7% note or
(2) Issue a $75,000, 90-day note that the creditor discounts at 7%.
a. Calculate the amount of the interest expense for each option.
b. Determine the proceeds received by the borrower in each situation.
c. Which alternative is more favorable to the borrower? Explain.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 55% (18 reviews)
a 75000 7 90360 131250 for each note b 1 75000 simpleinterest note ...View the full answer
Answered By
CHARLES AMBILA
I am an experienced tutor with more than 7 years of experience. I have helped thousands of students pursue their academic goals. My primary objective as a tutor is to ensure that students have easy time handling their academic tasks.
5.00+
109+ Reviews
323+ Question Solved
Related Book For
Financial Accounting An Integrated Statements Approach
ISBN: 978-0324312119
2nd Edition
Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren
Question Posted:
Students also viewed these Accounting questions
-
A borrower has two alternatives for a loan: (1) Issue a $180,000, 45-day, 10% note or (2) Issue a $180,000, 45-day note that the creditor discounts at 10%. a. Calculate the amount of the interest...
-
A borrower has two alternatives for a loan: (1) Issue a $240,000, 60-day, 8% note or (2) Issue a $240,000, 60-day note that the creditor discounts at 8%. (a) Calculate the amount of the interest...
-
A borrower has two alternatives for a loan: (1) Issue a $120,000, 90-day, 6% note or (2) Issue a $120,000, 90-day note that the creditor discounts at 6%. a. Calculate the amount of the interest...
-
Find the inverse of each of the given matrices by the method of Example 1 of this section. Data from Example 1 Find the inverse of the matrix First, we interchange the elements on the principal...
-
Income statement data for Moreno Company for two recent years ended December 31, are as follows: a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease)...
-
What happens to the options time value as the stock price rises? Why? MINI CASE Assume that you have just been hired as a financial analyst by Triple Play Inc., a mid-sized California company that...
-
This is actually a paired data situation (since each person was measured before and after eating organic), so we create a new variable, the differences in pesticide concentration, by taking pesticide...
-
Sublime Sandals Company was formed on January 1, 2014, and is preparing its annual financial statements dated December 31, 2014. Ending inventory information about the four major items stocked for...
-
Problem 6. (a) How many quadratic residues are in the residue set Z19? (b) Determine if 4 and 9 are quadratic residues mod 19. (c) Can you solve the congruence x 8 (mod 19)? [6 points]
-
The purpose of this project is to model the dynamics involved in introducing population of 100 deer into an area "dynamics" consisting of a patchwork of grassland and forest. By we mean we want to...
-
Collins Lighting Co. issues a 90-day note for $600,000 to Wolfman Supply Co. for merchandise inventory. Wolfman discounts the note at 10%. a. Journalize Collins entries to record: 1. The issuance of...
-
A business issued a 60-day, 8% note for $60,000 to a creditor on account. Record the entries for (a) The issuance of the note and (b) The payment of the note at maturity, including interest.
-
Let's say you and project team are three months into an eight-month project and you realize that you're already 2.5 weeks behind schedule and 15% over budget. What would you do?
-
Why has the fentanyl problem grown to the proportion that it has. What can the government do about it (if you think the government should be involved)? What non-governmental organizations or entity...
-
A what-if analysis that you could perform using spreadsheet software would be useful for answering the question a. How will it affect the total I pay for my car if I pay an extra $100 per month on my...
-
Legacy Furniture Co. General Ledger ASSETS 110 Cash 111 Petty Cash 112 Accounts Receivable 114 Interest Receivable 115 Notes Receivable 116 Merchandise Inventory 117 Supplies 119 Prepaid Insurance...
-
XYZ , Inc. uses the indirect method for the operating section of the Statement of Cash Flows. What is the net cash flow from operations based on the following information? Accounts Receivable...
-
Paula, an accountant at Kagan Industries, is considering buying a commercial building on the waterfront that will directly support the company's growth by appealing to its target clientele. Buildings...
-
True Or False Strict liability is applicable to defendants who carry out their activities with the utmost of care.
-
The baseball player A hits the ball from a height of 3.36 ft with an initial velocity of 34.8 ft/s. 0.14 seconds after the ball is hit, player B who is standing 15 ft away from home plate begins to...
-
Find a function (x, y, z) such that = (z, 2y, x).
-
Cumberland Furniture Company manufacturing unfinished oak furniture. Cumberland uses a standard cost system. The direct labor, direct materials, and factory overhead standards for an unfinished...
-
Pet Bottle Company (PBC) manufactures plastic two-liter bottles for the beverage industry. The cost standard per 100 two-liter bottles are as follows: Cost Category Standard Cost Per 100 Two ???...
-
The following data relate to the direct materials cost for the production of 2,000 automobile tires: (a) Determine the price variance, quantity variance, and total direct materials cost variance.(b)...
-
A portfolio has a standard deviation of 25%. The correlation of the portfolio and the market is 1. If the risk-free rate is 3.2%, the expected return on the market portfolio is 11%, and the standard...
-
(6 pts.) The following gas phase reaction system is conducted in an isothermal constant volume batch reactor. The reactor is charged with pure A with an initial concentration CAO AB ri = k CA B D r2...
-
Based on the NPV and IRR investment criteria, should your company introduce a new candy flavor? 1) Should the cost of a marketing survey be included in your decision? Why or why not? 2) Calculate the...
Study smarter with the SolutionInn App