Essay
A borrower has two alternatives for a loan:
(1) issue a $480,000, 60-day, 8% note or
(2) issue a $480,000, 60-day note that the creditor discounts at 8%.
(Assume a 360-day year is used for interest calculations.)
(a)Calculate the amount of the interest expense for each option.
(b)Determine the proceeds received by the borrower in each situation.
Correct Answer:
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(a)$480,000 × 8% × 60/360 = $6...View Answer
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