A Chinese Exporter Sells $200,000 of Toys to a French

A Chinese exporter sells $200,000 of toys to a French importer. The Chinese exporter requires the French importer to obtain a letter of credit. When the bank accepts the draft the exporter discounts the 90-day note at a 4% discount. What is the exporter's true effective annual financing cost?

A) 4.00%
B) 4.04%
C) 4.10%
D) 4.16%
E) 4.22% 200,000 * [1-(0.04 * 90/360) ] = 198,000; (200,000/198,000) ^365/90 -1 = 4.16%