2. Tremont Trucking is considering factoring its receivables. The company's average collection period is 30 days, and its average level of receivables is $5.0 million. Tremont's bad-debt losses average $25,000 every month. If the company factors its receivables, it will save $35,000 a month by eliminating its credit department. The factor has indicated that it requires a 2.0 percent factoring commission and a 4.0 percent reserve for returns and allowances. The factor will advance Tremont funds at 1 percentage point over prime, which is currently 3.25 percent. Determine the annual financing cost after considering cost savings and bad-debt losses (the net AFC)