9. To illustrate the value of knowledge of the effective interest rate to oil management, assume that a short-term loan for 1 year only could be arranged for an oil company in temporary distress. The company needs $100,000 for immediate working capital at either a nominal rate of 12% compounded monthly or a nominal rate of 15% compounded semiannually. The oil company wants to know which arrangement would provide the oil company with the lower debt at the end of the short-term loan period. The use of the effective interest rate formula gives the answer. (2 points) 9. To illustrate the value of knowledge of the effective interest rate to oil management, assume that a short-term loan for 1 year only could be arranged for an oil company in temporary distress. The company needs $100,000 for immediate working capital at either a nominal rate of 12% compounded monthly or a nominal rate of 15% compounded semiannually. The oil company wants to know which arrangement would provide the oil company with the lower debt at the end of the short-term loan period. The use of the effective interest rate formula gives the answer. (2 points)