Wilson's Dry Goods has a line of credit with a local bank for $250,000. The loan agreement calls for interest of 7.6 percent with a compensating balance requirement of 5 percent, which is based on the total amount borrowed. What is the effective interest rate if the firm needed $138,000 for one year to cover its expansion costs?

A. 8.38%

B. 8.00%

C. 7.60%

D. 8.55%

E.8.13%