Saskatchewan Wheat Fields Inc

Saskatchewan Wheat Fields Inc.is planning to issue $100 million of commercial paper with 30 days to maturity.There is a 3% probability that the firm will default on the issue and the investor will receive $40 million (or 40 cents on the dollar) .The investor's required rate of return is 5%.If the firm wishes to issue the commercial paper at par, the promised yield must be:

A) 2.29%
B) 7.01%
C) 27.42%
D) 42.27%