Fancy Footwear has a line of credit with your local bank for $150,000. The loan agreement calls for interest of 10 percent with a 4 percent compensating balance requirement which is based on the total amount borrowed. What is the effective interest rate if you need $128,500 for one year to cover your operating expenses?

10.42 percent

9.95 percent

9.50 percent

10.08 percent

10.33 percent