Instruction: Use 2 decimal places only. If you are offered the following promissory notes, which note will you choose based on effective rate (using the calendar of 360 days a year)? Use simple discounting.

Option 1: FV = 10,000

I = 8%

T = 45 DAYS

EFFECTIVE RATE (%) = ?

Option 2:

FV = 15,000

I = 7%

T = 50 DAYS

EFFECTIVE RATE (%) = ?

Option 3:

FV = 25,000

I = 7%

T = 20 DAYS

EFFECTIVE RATE (%) = ?

Option 4:

FV = 5,000

I = 8%

T = 15 DAYS

EFFECTIVE RATE (%) = ?

As a lender, I choose option number___