On January 1, 2014, ER Signed a $120,000, 10%, Three-Year

Multiple Choice

On January 1, 2014, ER signed a $120,000, 10%, three-year, note payable.The proceeds are to be used to purchase a computer and related software for the company.The lending institution advanced proceeds of $115,800 and took a mortgage on the computer.The note is payable in three equal annual instalments starting on December 31, 2014.The effective interest rate to use for this debt is (rounded to the nearest percent; do not interpolate) :

A) 12%.
B) 13%.
C) 10%.
D) 11%.