Markel Industries had a revolving credit agreement with its bank for a loan of $500,000 during the year 2019. The company experienced a slack in collecting its receivables and hence took a loan of $400,000 during its season fime for a period of 8 months. The bank charged an interest rate of 12% per annum, requiring a compensating balance of 10% and a commitment fee of 5%.

What was the effective cost of this loan for Markel Industries?