You've Worked Out a Line of Credit Arrangement That Allows

You've worked out a line of credit arrangement that allows you to borrow up to $50 million at any time. The interest rate is 0.5 percent per month. In addition, 5 percent of the amount that you borrow must be deposited in a non-interest bearing account. Assume your bank uses compound interest on its line of credit loans. What is the effective annual interest rate on this lending arrangement?

A) 6.50 percent
B) 6.62 percent
C) 6.81 percent
D) 6.87 percent
E) 6.94 percent