Scan Bookkeeping has a $200,000 compensating balance loan with its bank. The terms of the loan call for Scan to keep 5% of the loan as a compensating balance and pay interest at an annual rate of 6.50% on the entire amount. If the firm borrows the maximum amount for one year, how much interest is due at the end of the year?

A.$10,650

B.$12,375

C.$11,250

D.$13,000