A borrower has two alternatives for a loan: (1) Issue a $180,000, 45-day, 10% note or (2)
Question:
(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 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 180000 10 45360 2250 for each alternative b 1 180000 simpleintere...View the full answer
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