Smith Enterprise Credit Line

Smith Enterprise Credit Line
Smith Enterprise has a one year credit line of $5,000,000 with Second Bank. On average Smith uses $3,250,000 of the credit line. Second Bank charges a .45% commitment fee on the unused portion of the line and the interest rate is set at LIBOR +1.5%. The bank also requires a 5% compensating balance.
-If Smith needs to borrow $3,250,000, what is the effective borrowing rate if the LIBOR equals 6.3%?

A) 8.62%
B) 8.04%
C) 7.59%
D) 8.43%