A borrower has two alternatives for a loan: (1) Issue a $90,000, 90-day, 6% note (2) Issue
Question:
(1) Issue a $90,000, 90-day, 6% note
(2) Issue a $90,000, 90-day note that the creditor discounts at 6%.
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.
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a 90000 6 90360 1350 for each alternative b 1 90000 simpleinteres...View the full answer
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Related Book For
Accounting
ISBN: 978-0324188004
21st Edition
Authors: Carl s. warren, James m. reeve, Philip e. fess
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