On January 1, 20x1, MamaMia Co. acquired 12%, P4,000,000 bonds at 98. Commission paid to brokers amounted to P204,000. Principal is due on December 31, 20x4 but interest payments are made annually...

On January 1, 20x1, MamaMia Co. acquired 12%, P4,000,000 bonds at 98. Commission paid to brokers amounted to P204,000. Principal is due on December 31, 20x4 but interest

payments are made annually starting December 31, 20x1.

The adjusted effective interest rate on the investment is closest to
a. 12%
b. 11%
c. 10.2650%
d. Indeterminable