Question

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McGrath Corporation recently issued 210-day commercial paper with a face value of $1,500,000 and a simple interest rate of 13 percent. The company paid a transaction fee equal to 0.3 percent of the issue, which was taken out of the issue amount before the company received any funds. Assuming there are 360 days in a year, what are the commercial paper's annual percentage rate (APR) and effective annual rate (rEAR), respectively? (Round your answer to two decimal places.)

A. 14.01% and 14.35%

B. 13.97% and 14.23%

C. 14.20% and 14.74%

D. 14.11% and 14.52%

E. 13.75% and 14.04%

Answer 1