Fruit Flavors Online Inc. plans to issue $5,000,000 of commercial paper with a 6-month maturity at 97% of par value. What is the 6-month interest rate?
A) 1.50%
B) 3.00%
C) 3.09%
D) 6.18%
Answer: C
Explanation: C) Rate = Interest due ÷ Discounted amount = ($5,000,000 × (1 - 0.97))/ ($5,000,000 × 0.97) = 3.09%.
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