A company has negotiated a credit facility with the following terms:

$5,000,000 line of credit $3,000,000 average borrowing 30 basis point commitment fee on unused portion of line Interest rate on advances is 1-month LIBOR plus 4% 1-month LIBOR is currently 2% Compensating balance requirement of 20% on the outstanding borrowings

What is the effective annual borrowing rate for the line of credit?

A. 6.0%
B. 6.2%
C. 7.8%
D. 9.3%