3.2 Study the information provided below and advise whether the proposed increase in the discount (12 marks) offered (from 2.5 % to 3%) should be made? Show all calculations. INFORMATION The credit terms of Macy Traders are currently 2.5/10 net 30. The selling price of the only product that it sells is R300 per unit and the variable cost per unit is R160. The firm wants to determine the overall effect on profit if it changes its credit terms, by increasing the settlement discount from 2.5% to 3%. The table below shows the current situation and the expected changes arising from the new credit terms: Current: 2.5/10 net 30 Proposed: 3/10 net 30 Debtors collection period 45 days 30 days Credit sales 120 000 units 150 000 units Bad debts 6% of sales 2% of sales Percentage of the customers who make/would make use of the discount 50% 70% The required rate of return on equal-risk investments is 20%