Juno Industrial Supply Has a $150,000 Line of Credit with a 6.5

Juno Industrial Supply has a $150,000 line of credit with a 6.5 percent interest rate. The loan agreement requires a 2 percent compensating balance, which is based on the total amount borrowed, and which will be held in an interest-free account. What is the effective interest rate if the firm borrows $90,000 on the line of credit for one year?

A) 6.42 percent
B) 6.47 percent
C) 6.50 percent
D) 6.58 percent
E) 6.63 percent