Pacific Motors Inc. plans to issue $3,000,000 of commercial paper with a 6-month maturity at 98% of par value. What is the 6-month interest rate?
A) 2.00%
B) 4.00%
C) 2.04%
D) 4.08%
Answer: C
Explanation: C) Rate = Interest due ÷ Discounted amount = ($3,000,000 × (1 - 0.98))/ ($3,000,000 × 0.98) = 2.04%.
Business
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