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Consider a $5,000, 6%, 180-day interest-bearing note and a non-interest- pearing note for the same amount and time period with a bank discount of 5%. From the borrower's point of view, which is the better loan and why?

Consider a $5,000, 6%, 180-day interest-bearing note and a non-interest- pearing note for the same amount and time period with a bank discount of 5%. From the borrower's point of view, which is the better loan and why?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Consider a $5,000, 6%, 180-day interest-bearing note and a non-interest- bearing note for the same amount and time period with a bank discount of 6%. From the borrower's point of view, which is the better loan and why?
Transcribed Image Text:Consider a $5,000, 6%, 180-day interest-bearing note and a non-interest- bearing note for the same amount and time period with a bank discount of 6%. From the borrower's point of view, which is the better loan and why?
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