Evaluating Alternative Notes A borrower has two alternatives for a loan: (1) issue a $480,000, 60-day, 7% note or (2) issue a $480,000, 60-day note that the creditor discounts at 7%. Assume a 360-day year.

Evaluating Alternative Notes A borrower has two alternatives for a loan: (1) issue a $480,000, 60-day, 7% note or (2) issue a $480.000, 60-day creditor discounts at 7%. Assume a 360-day year. a. Calculate the amount of the interest expense for each option. ote that the 11,200 X for each alternative. b. Determine the proceeds received by the borrower in each situation. (1) $480,000, 60-day, 7% simple-interest (2) $480,000, 60-day note discounted at 7% c. Alternative 1 is more favorable to the borrower since the effective interest rate on alternative 1 is 7% rate on alternative 2 is 7.08% $468,800 | X 468,800 X and the effective