A borrower has two alternatives for a loan: (1) issue a $720,000, 120-day, 6% note or (2) issue a $720,000, 120-day note that the creditor discounts at 6%. Assume a 360-day year.

a. Calculate the amount of the interest expense for each option. $___________ for each alternative.

b. Determine the proceeds received by the borrower in each situation.

(1) $720,000, 120-day, 6% simple-interest	$_______________
(2) $720,000, 120-day note discounted at 6%	$________________