The Difference in Computing the Effective Interest Rate for Non-Interest-Bearing

Multiple Choice

The difference in computing the effective interest rate for non-interest-bearing obligations as compared to installment obligations is

A) one has an effective interest rate of zero, while the other is determined using present value factors.
B) one uses the 'present value of a single sum' table and the other uses the 'present value of an ordinary annuity' table.
C) one is based on the market rate of interest, while the other is based on a stated rate of interest.
D) determined by the length of the debt maturity period.