A company is considering the factoring of its accounts receivable. The following details apply to this company: - Credit sales amounts to $8 million per annum. - Average collection period is 90 days. The factor quoted the company as follows: - A service facility charge of 0.6% on credit sales. - A finance facility charge of 13.5% per annum on outstanding accounts receivable. - An interest rebate of 12% on retention amounts to be held. - Retention of 25% of outstanding accounts receivable by the factor. It is estimated that cost savings of $37,000 would result from the factor administering the accounts receivable. Calculate the effective cost rate. Show your workings and answer in the space provided below