The Following Information Was Extracted from the Financial Records of Lewis

Multiple Choice

The following information was extracted from the financial records of Lewis Company.
$$\begin{array} { | l | r | r | } \hline & { 2017 } &{ 2016 } \\\hline \text { Balance Sheet } & & \\\hline \text { Notes payable } & \$ 400,000 & \$ 400,000 \\\hline \text { Less: Discount on notes payable } & 24,000 & 28,000 \\\hline & & \\\hline \text { Income Statement } & & \\\hline \text { Interest expense } & \$ 32,800 & \$ 32,400 \\\hline\end{array}$$
Based on this information, what is the effective interest rate on the notes payable?

A) 8.2%
B) 8.8%
C) 6.0%
D) 2.2%