● XYZ Ltd. Currently has sales of `30,00,000 with an average period of 2 months. At present, no discounts are offered to the customers. The management of the company is thinking to allow a discount of 2% on cash sales which results in the following:

(a) The average collection period would reduce to one month

(b) 50% of customers would take advantage of 2% discount

(c) The company normally requires a 25% return on its investment Advise the management whether to extend discount on cash sales or not.