A firm has established a revolving line of credit for $700,000 with a bank at a discounted interest rate of prime plus 2%. There is a fee of 1% on any unused funds. Prime was 5% when the agreement was made. Assume the firm decides to take down the line for $400,000 for 90 days during the year when the prime is at 6%. Determine the effective annual rate on the short-term borrowing.