Bacon Signs Inc. has planned a 3-month issue of commercial paper with a face value of $15,000,000. The paper is set to sell at 99.5% of face value. What is the 3-month interest rate?
A) 0.5000%
B) 0.5025%
C) 0.5035%
D) 0.5050%
Answer: B
Explanation: B) Rate = Interest due ÷ Discounted amount
= ($15,000,000 × (1 - 0.995))/ ($15,000,000 × 0.995) = 0.5025%.
Business
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