A Borrower Has Two Alternatives for a Loan: (A) Issue

question 130

Essay

A borrower has two alternatives for a loan: (a) 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.

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Definitions:

Disabled Adults

Individuals over the age of adulthood who are unable to perform certain activities due to physical or mental impairments.

Crystal Form

The external shape displayed by a crystal or a mineral, determined by the internal arrangement of its atoms or molecules.

Cleavage

1. The tendency of minerals to break along specific orientations of closely spaced planes. 2. The tendency of a rock, especially a metamorphic rock, to split along mostly parallel planes.

Luster

The reflection of light from the surface of a mineral, especially its quality and intensity; the appearance of a mineral in reflected light.