A Borrower Has Two Alternatives for a Loan

question 109

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.

---

Definitions:

Political Topics

Subjects or issues related to governmental policies, actions, and systems that affect the governance and regulation of a society.

Internal Whistleblowing System

An organized procedure within companies allowing employees to report illegal practices or violations of company policies confidentially.

Wrongful Discharge

The unjust or unlawful termination of an employee's contract of employment, violating statutory provisions or terms of an employment agreement.

Jury Duty

A civic obligation requiring individuals to serve on a jury during legal proceedings.