3. Tremont Trucking is considering factoring its receivables. The company's average collection period is 30 days, and its average level of receivables is $4.8 million. Tremont's bad-debt losses average $20,000 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 1.75 percent factoring commission and a 3.0 percent reserve for returns and allowances. The factor will advance Tremont funds at 1.25 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 )