Your company has agreed to a $480 million fixed-commitment line of credit. The loan agreement calls for your company to pay 1.55 percent per quarter on any funds borrowed and maintain a 4 percent compensating balance on any funds borrowed at zero percent interest. What is the effective annual interest rate on this line of credit?

Multiple Choice

• 5.44%

• 6.61%

• 6.48%

• 5.64%

• 6.35%