An advertising firm has 100 clients, each generating $500,000 in sales. It currently generates profitability reports only by office. One office president suggests that the firm produce profitability reports for each individual client. He estimates that 30 clients are running at a net loss of 20% on their sales. A new client reporting system could be installed for $1,000,000.

This system would identify the clients that are losing money, so the advertising firm could drop those clients or develop a plan to make them profitable.

Assuming the office president's assumptions are correct, should the advertising firm install the new system? Explain.