Formal line of credit: Gruppa, Inc., has just set up a formal line of credit of $10 million with First Community Commercial Bank.

The line of credit is good for up to five years. The bank will charge Gruppa an interest rate of 6.25 percent on any amount borrowed, and the firm will pay an annual fee of 60 basis points on the unused balance. The firm borrowed $7.5 million on the first day the credit line became available. What is the effective interest rate on this line of credit?