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Pacific Automotive has a $150,000 compensating balance loan with its bank. The terms of the loan call for Pacific to keep 8% of the loan

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Pacific Automotive has a $150,000 compensating balance loan with its bank. The terms of the loan call for Pacific to keep 8% of the loan as a compensating balance and pay interest at an annual rate of 5.50% on the entire amount. If the firm borrows the maximum amount for one year, what is the EAR on this loan? O A. 5.98% OB. 7.22% O C. 6.22% OD. 6.07%

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