Jasmine Scents has been given two competing offers for short-term financing. Both offers are for borrowing $39,000 for 1 year. The first offer is a discount loan at 7.04%; the second offer is for interest to be paid at maturity at a stated interest rate of 7.47%. Calculate the effective annual rates for each loan and indicate which loan offers the best terms.

The effective annual rate for the first loan is _____%. (Round to two decimal places.)

The effective annual rate for the second loan is ______%. (Round to two decimal places.)

Which loan offers the best terms and why? (Select the best answer below.)

A. The first loan offers the best terms because Jasmine Scents will pay less interest based on the effective annual rate.

B. The first loan offers the best terms because the nominal rate is 7.04% which is lower than the nominal rate, 7.47%, on the second loan.

C. The second loan offers the best terms because Jasmine Scents will pay less interest based on the effective annual rate.

D. The second loan offers the best terms because Jasmine Scents will earn more interest based on the effective annual rate.

E. The second loan offers the best terms because Jasmine Scents will earn more interest based on the effective annual rate.