Dynamic Industries Ltd. has arranged to finance its seasonal working-capital needs with a short-term bank loan. The loan will carry a rate of 7.5 percent per annum with interest paid in advance (discounted). In addition, Everest must maintain a minimum demand deposit with the bank of 9 percent of the loan balance throughout the term of the loan.

If Everest plans to borrow $1.2 million for a period of 6 months, what is the cost of the bank loan?