.  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

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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
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