Evaluating Alternative Notes A borrower has two alternatives for a loan: (1) issue a $360,000, 120-day, 9% note or (2) issue a $360,000, 120-day note that the creditor discounts at 9%. 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) $360,000, 120-day, 9% simple-interest (2) $360,000, 120-day note discounted at 9% c. Alternative effective rate on alternative 2 is $ is more favorable to the borrower since the effective interest rate on alternative 1 is and the

Evaluating Alternative Notes A borrower has two alternatives for a loan: (1) issue a 5360,000,120-day, 996 note or (2) issue a 5360,000,120-day note that the creditor discounts at 986 . 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 stuation. c. Aiternative is more favorable to the borrower since the effective interest rate on alternative 1 is and the erfective rate on aiternative 2 is