Stephens Metals Company has a revolving credit agreement with its bank permitting it to borrow up to $25 million at an annual interest rate of 12. Stephens is required to maintain a 10% compensating...

Stephens Metals Company has a revolving credit agreement with its bank permitting it to borrow up to $25 million at an annual interest rate of 12. Stephens is required to maintain a 10%  compensating balance on any funds borrowed under this agreement and to pay a 0.5% commitment fee on the unused portion of the credit line. The company maintains a $500,000 balance at the bank that can be used to meet the compensating balance requirement. Determine the annual finance cost of borrowing the $20 million under this revolving credit. *show work*

A) 13.3%

B) 13.5%

C) 13.1%

D) 12.0%