Amalgamated Appliance Inc. has planned a 3-month issue of commercial paper with a face value of $25,000,000. The paper is set to sell at 98.5% of face value. What is the 3-month interest rate?
A) 3.04%
B) 6.08%
C) 2.17%
D) 1.52%
Answer: D
Explanation: D) Rate = Interest due ÷ Discounted amount
= ($25,000,000 × (1 - 0.985))/ ($25,000,000 × 0.985) = 1.52%.
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