Evaluating alternative notes A borrower has two alternatives for a loan: (1) issue a $450,000, 90-day, 6% note or (2) is

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Evaluating Alternative Notes A Borrower Has Two Alternatives For A Loan 1 Issue A 450 000 90 Day 6 Note Or 2 Is 1 (215.67 KiB) Viewed 34 times

Evaluating alternative notes A borrower has two alternatives for a loan: (1) issue a $450,000, 90-day, 6% note or (2) issue a $450,000, 90-day note that the creditor discounts at 6%. Assume a 360-day year. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. X Open spreadsheet A. Calculate the amount of the interest expense for each option. Round your answer to the nearest dollar. $ X for each alternative B. Determine the proceeds received by the borrower in each alternative. Round your answers to the nearest dollar. (1) $450,000, 90-day, 6% interest-bearing note: $ 450,000 X (2) $450,000, 90-day note discounted at 6%: $ C. Alternative is more favorable to the borrower because the borrower receives more cash Feedback Check My Work A 360-day year is used when calculating interest on a note. Recall the definition of proceeds is the amount that the borrower receives in cash or merchandise. K