Question: A borrower has two alternatives for a loan: (1) Issue a $90,000, 90-day, 6% note (2) Issue a $90,000, 90-day note that the creditor discounts

A borrower has two alternatives for a loan:
(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 full answer

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