eBook Show Me How Evaluating alternative notes A borrower has two alternatives for a loan: (1) issue a $420,000, 120-day, 8% note or (2) issue a $420,000, 120-day note that the creditor discounts at 8%. Assume a 360-day year. a. Compute the amount of the interest expense for each option. for each alternative. b. Determine the proceeds received by the borrower in each situation. (1) $420,000, 120-day, 8% interest-bearing note (2) $420,000, 120-day note discounted at 8% c. Alternative 1 is more favorable to the borrower because the borrower receives more cash Feedback Check My Work A 360-day year is used when calculating interest on a note. Recall the definition of proceeds is the amount that the borrower receives in cash or merchandise. Consider amount of money available for use. Check My Work Save and Extr Sudomise