Michael's Computers' local bank offers the firm a 12-month revolving credit agreement (revolver) of $500,000.The revolver's APR is 12 percent with a commitment fee of 0.5 percent on the unused portion.

Over the course of a year, Michael's Chief Financial Officer (CFO) believes it will have an average balance of $280,000 on the revolver, with a low of $50,000 and a high of $450,000.What is the annual effective cost of this proposed agreement?