Assume Pediatric Partners borrows $75,000 from a bank at an annual interest rate of 10 percent. If the bank requires Pediatric Partners to maintain a compensating balance equal to 10 percent of the face amount of the loan, what is the effective interest rate on the loan?

a. 10.0 percent

b. 10.5 percent

c. 10.8 percent

d. 11.1 percent

e. The answer cannot be determined from the information provided.