c. A factor will buy the company's receivables ($100,000 per month), which have a collection period of 60 days. The factor will advance up to 75 percent of the face value of the receivables at 12 percent on an annual basis.

The factor will also charge a 2 percent fee on all receivables purchased. It has been estimated that the factor's services will save the company a credit department expense and bad-debt expenses of $1,500 per month.

On the basis of annual percentage cost, which alternative should Barnes select?