if the prime rate is 12 apr which arrangement is less costly for cash poor 540198

The Cash Poor Company is considering using its $1 million of accounts receivable to secure financing for the next month. Cash Poor has approached two financing firms, each offering different arrangements. Firm A is willing to lend Cash Poor 75% of the face value of the receivables at 60 basis points above the prime rate. Firm B is willing to factor Cash Poor’s receivables, advancing 75% of the receivables, collecting a fee up front of 1% of all receivables, and charging interest at 30 basis points above the prime rate. In the case of Firm A’s arrangement, Cash Poor continues with its evaluation and collection of credit, but in the case of Firm B’s arrangement, Firm B performs all the credit functions, saving Cash Poor an estimated $10,000 over the next month. If the prime rate is 12% APR, which arrangement is less costly for Cash Poor?