Illustrator: Cut a hole in rectangle

I created a rectangle with Adobe Illistrator.  How can I cut a whole in it?  I tried the knife tool but I can't get it to do anything.
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hankknightAsked:
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captainConnect With a Mentor Commented:
Hi

This is relatively straight forward.

Draw your box first, then draw a circle for your hole. Shape the circle if you don't want it to be round.

Make sure the hole object is in front of the box and then bring up the 'Pathfinder' palette from the Window menu.

Select both objects and use the 'Exclude overlapping Shape areas' tool from the palette to cut the top shape (hole) from the box.

hth
capt.
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