The questions below are based on Rite Aid annual financial statements (10-K) for fiscal year 2009 (the year ended February 27, 2010). You can download the annual reports (10-K) from SEC website:

https://www.sec.gov/Archives/edgar/data/84129/000104746910004332/a2197990z10-k.htm

*Consider the 9.375 % senior secured notes due December 2015. Assume that interest is paid annually.

1. Using the financial effects template, record the annual interest expense for the year ended February 27, 2010. Note that there is a cash and noncash portion to interest expense on these notes because they were issued at a discount. The noncash portion is the amortization of the discount during the year.
2. Compute the total rate of interest (i.e. the effective interest rate for the Total interest expense) recorded for fiscal year 2009 for these notes.