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Calculate the amount of the interest expense for each option

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Reference no: EM132742655

Problem - Evaluating alternative notes - A borrower has two alternatives for a loan: (1) issue a $150,000, 45-day, 4% note or (2) issue a $150,000, 45-day note that the creditor discounts at 4%.

Required -

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

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

c. Which alternative is more favorable to the borrower? Explain.

Reference no: EM132742655

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