On September 1, 2011, Hiker Shoes issued a $100,000, 8-month, noninterest-bearing note. The loan was made by Second Commercial Bank whose stated discount rate is 9%. Hiker’s effective interest rate on this loan (rounded) is:

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On September 1, 2011, Hiker Shoes issued a $100,000, 8-month, noninterest-bearing note. The loan was made by Second Commercial Bank whose stated discount rate is 9%. Hiker’s effective interest rate on this loan (rounded) is:

A. 9.0%.
B. 9.5%.
C. 9.6%.
D. 9.7%.

Answer: C

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