Evaluating Alternative Notes A borrower has two alternatives for a loan: (1) issue a $660,000, 120-day, 6% note or (2) issue a $660,000, 120-day note that the creditor discounts at 6%. Assume a 360-day year. a. Calculate the amount of the interest expense for each option. $fill in the blank 1 for each alternative. b. Determine the proceeds received by the borrower in each situation. (1) $660,000, 120-day, 6% interest-bearing note $fill in the blank 2 (2) $660,000, 120-day note discounted at 6% $fill in the blank 3 c. Alternative is more favorable to the borrower because the borrower .

Evaluating Alternative Notes A borrower has two alternatives for a loan: (1) issue a $660,000, 120-day, 6% note or (2) issue a $660,000, 120-day note that the creditor discounts at 6%. Assume a 360-day year. a. Calculate the amount of the interest expense for each option. $fill in the blank 1 for each alternative. b. Determine the proceeds received by the borrower in each situation. (1) $660,000, 120-day, 6% interest-bearing note $fill in the blank 2 (2) $660,000, 120-day note discounted at 6% $fill in the blank 3 c. Alternative is more favorable to the borrower because the borrower .

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter7: Using Consumer Loans

Section: Chapter Questions

Problem 5FPE

See similar textbooks

Similar questions

A borrower has two alternatives for a loan: (1) issue a $390,000, 120-day, 8% note or (2) issue a $390,000, 120-day note that the creditor discounts at 8%. Assume a 360-day year. a. Compute the amount of the interest expense for each option.fill in the blank 1 of 1$ for each alternative. b. Determine the proceeds received by the borrower in each situation. Line Item Description Amount (1) $390,000, 120-day, 8% interest-bearing note $fill in the blank 2 (2) $390,000, 120-day note discounted at 8% $fill in the blank 3
Evaluating Alternative Notes A borrower has two alternatives for a loan: (1) issue a $360,000, 60-day, 5% note or (2) issue a $360,000, 60-day note that the creditor discounts at 5%. Assume a 360-day year. a. Calculate the amount of the interest expense for each option. $fill in the blank 1 for each alternative. b. Determine the proceeds received by the borrower in each situation. (1) $360,000, 60-day, 5% simple-interest $fill in the blank 2 (2) $360,000, 60-day note discounted at 5% $fill in the blank 3 c. Alternative is more favorable to the borrower since the effective interest rate on alternative 1 is and the effective rate on alternative 2 is .
Evaluating alternative notesA borrower has two alternatives for a loan: (1) issue a $360,000, 60-day,5% note or (2) issue a $360,000, 60-day note that the creditor discounts at5%.a. Calculate the amount of the interest expense for each situation.b. Determine the proceeds received by the borrower in eachsituation.c. Which alternative is more favorable to the borrower? Explain.
Evaluating Alternative Notes A borrower has two alternatives for a loan: (1) issue a $360,000, 60-day, 5% note or (2) issue a $360,000, 60-day note that the creditor discounts at 5%. Assume a 360-day year. a. Compute the amount of the interest expense for each option.$ for each alternative .b. Determine the proceeds received by the borrower in each situation (1) $360,000, 60-day, 5% simple-interest $ (2) $360,000, 60-day note discounted at 5%
A borrower has two alternatives for a loan: (1) issue a $360,000, 60-day, 5% note or (2) issuea $360,000, 60-day note that the creditor discounts at 5%.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.
A borrower has two alternatives for a loan: (1) issue a $360,000, 60-day, 5% note or (2) issue a $360,000, 60-day note that the creditor discounts at 5%. a. Compute 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.
A borrower has two alternatives for a loan: (1) issue a $300,000, 120-day, 8% note or (2) issue a $300,000, 120-day note that the creditor discounts at 8%. Assume a 360-day year. a. Calculate the amount of the interest expense for each option.$ for each alternative. b. Determine the proceeds received by the borrower in each situation. (1) $300,000, 120-day, 8% interest-bearing note $ (2) $300,000, 120-day note discounted at 8% $ c. Alternative is more favorable to the borrower because the borrower .
Evaluating alternative notes A borrower has two alternatives for a loan: (1) issue a $510,000, 120-day, 9% note or (2) issue a $510,000, 120-day note that the creditor discounts at 9%. Assume a 360-day year. a. Compute the amount of the interest expense for each option. for each alternative. b. Determine the proceeds received by the borrower in each situation. (1) $510,000, 120-day, 9% Interest-bearing note (2) $510,000, 120-day note discounted at 9% c. Alternative. ) is more favorable to the borrower because the borrower
(J) A borrower has two alternatives for a loan: (1) issue a $185,000, 60-day, 4% note or (2) issue a $185,000, 60-day note that the creditor discounts at 4%.a. Compute 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.
A borrower has two alternatives for a loan: (1) issue a $360,000, 75-day, 6% note or (2) issue a $360,000, 75-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. Calculate the amount of the interest expense for each option. Round your answer to the nearest dollar. $ ________________________ Determine the proceeds received by the borrower in each alternative. Round your answers to the nearest dollar. (1) $360,000, 75-day, 6% interest-bearing note: $___________________________ (2) $360,000, 75-day note discounted at 6%: $ _________________________
A borrower has two alternatives for a loan: (1) issue a $420,000, 30-day, 6% note or (2) issue a $420,000, 30-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. Calculate the amount of the interest expense for each option. Round your answer to the nearest dollar. $ fill in the blank 2 for each alternative. Determine the proceeds received by the borrower in each alternative. Round your answers to the nearest dollar. (1) $420,000, 30-day, 6% interest-bearing note: $ fill in the blank 3 (2) $420,000, 30-day note discounted at 6%: $ fill in the blank 4 Alternative 1 is more favorable to the borrower because the borrower receives more cash .
A borrower has two alternatives for a loan: (1) issue a $480,000, 60-day, 8% note or (2) issue a $480,000, 60-day note that the creditor discounts at 8%. (Assume a 360-day year is used for interest calculations.) Required: a. Calculate the amount of the interest expense for each option.$fill in the blank 1 for alternative (1)$fill in the blank 2 for alternative (2) b. Determine the proceeds received by the borrower in each situation. Alternative 1 $fill in the blank 3 proceeds Alternative 2 $fill in the blank 4 proceeds