Cost of factoring?) MDM Inc. is considering factoring its receivables. The firm has credit sales of ?$500,000 per month and has an average receivables balance of ?$1,000,000 with? 60-day credit terms. The factor has offered to extend credit equal to 90 percent of the receivables factored less interest on the loan at a rate of 1.6 percent per month. The 10 percent difference in the advance and the face value of all receivables factored consists of a 3 percent factoring fee plus a 7 percent? reserve, which the factor maintains. In? addition, if MDM Inc. decides to factor its? receivables, it will sell them? all, so that it can reduce its credit department costs by ?$1,300 a month. What is the cost of borrowing the maximum amount of credit available to MDM Inc. through the factoring? agreement?
Note?: Assume a? 30-day month and? 360-day year. QUESTION: The cost of borrowing the maximum amount of credit available to MDM Inc. through the factoring agreement is _______?%. ?(Round to two decimal? places.)