The Stoney River Pennant Company Uses Commercial Paper to Satisfy

The Stoney River Pennant Company uses commercial paper to satisfy part of its short-term financing requirements.Next week,it intends to sell $18 million in 90-day maturity paper on which it expects to have to pay discounted interest at an annual rate of 7 percent per annum.In addition,Stoney River expects to incur a cost of approximately $25,000 in dealer placement fees and other expenses of issuing the paper.What is the effective annual cost of credit to Stoney River?

A) 7.7%
B) 7.5%
C) 7.3%
D) 7.1%