Answer:
A) More than the stated discount rate of 8%.
Explanation:
to determine effective interest rate:
$16,000,000 x 8% x 7/12 = $746,666,67
[$746,666,67 / ($16,000,000 -$746,666,67)] x 7/12 = ($746,666,67 / $15,253,333.33) x 12/7 = 0.0839 or 8.39%
since the effective interest rate is 8.39%, it means that it is higher than the stated discount rate
