East Coast Cleaners Borrows $20,000 for 120 Days and Pays

Multiple Choice

East Coast Cleaners borrows $20,000 for 120 days and pays $400 interest. What is the effective rate of interest if the loan is discounted?

A) Less than 5.5%
B) More than 5.5% but less than 6.0%
C) More than 6.0% but less than 6.5%
D) More than 6.5%