(Cost of secured short-term credit) The Marlow Sales and Distribution Co. needs $500,000 for the 3-month period ending September 30, 2018. The firm has explored two possible sources of credit. a. Marlow has arranged with its bank for a $500,000 loan secured by its accounts receivable. The bank has agreed to advance Marlow 85 percent of the value of its pledged receivables at a rate of 10 percent plus a 1 percent fee based on all receivables pledged. Marlow's receivables average a total of $1 million year-round. b. An insurance company has agreed to lend the $500,000 at a rate of 8 percent per annum, using a loan secured by Marlow's inventory of salad oil. A field-warehouse agreement would be used, which would cost Marlow $2,200 a month. Which source of credit should Marlow select? Explain. Note: Assume a 30-day month and 360-day year.