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Evaluating Alternative Notes

A borrower has two alternatives for a loan: (1) issue a $660,000, 90-day, 9% note or (2) issue a $660,000, 90-day note that the creditor discounts at 9%. Assume a 360-day year.

a.  Calculate the amount of the interest expense for each option.

$ for each alternative.

b.  Determine the proceeds received by the borrower in each situation.

(1) $660,000, 90-day, 9% simple-interest

$

(2) $660,000, 90-day note discounted at 9% 

$

Reference no: EM13999925

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