Evaluating Alternative Notes

A borrower has two alternatives for a loan: $(1)$ issue a $$150,000,45-$day, $4\%$ note or $(2)$ issue a $$150,000,45-$day note that the creditor discounts at $4\%.$ Assume a $360-$day year.

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

$fill in the blank $1$

for each alternative.

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

$(1)$ $$150,000,45-$day, $4\%$ interest$-$bearing note $fill in the blank $2$

$(2)$ $$150,000,45-$day note discounted at $4\%$ $fill in the blank $3$

c$.$ Alternative

$1$

is more favorable to the borrower because the borrower

receives more cash

$.$