Polymath Associates arranged a $9 million revolving credit agreement with a group of banks. The firm must pay an annual commitment fee of 0.25% on the unused balance of the loan commitment. On the used portion of the revolver, it must pay 1.25% above the prime rate. The prime rate is expected to be 4.0% over the year. The firm faces a compensating balance requirement of 12% and its normal deposit balance is $100,000. If the firm borrows $7 million immediately once the revolver is signed, and repays at the end of one year, what is the AFC of the revolver? Select the closest answer.

Group of answer choices

6.08%

5.34%

5.96%

5.11%

6.26%