Petrol Ibrico, a European gas company, is borrowing $700,000,00 via a syndicated eurocredit for six years at 100 basis points over LIBOR. LIBOR for the loan will be reset every six months. The funds will be provided by a syndicate of eight leading investment bankers, which will charge up-front fees totaling 1.6% of the principal amount. What is the effective interest cost for the first year if the annual LIBOR is 3.50% during the first six months and 3.70% during the second six months.