Gardner Company currently makes all sales on credit and offers no cash discount. The firm is

considering offering a 2% cash discount for payment within 15 days. The firms current average

collection period is 60 days, sales are 40,000 units, selling price is $45 per unit, and variable cost

per unit is $36. The firm expects that the change in credit terms will result in an increase in sales

to 42,000 units, that 70% of the sales will take the discount, and that the average collection period

will fall to 30 days. If the firms required rate of return on equal-risk investments is 25%, should

the proposed discount be offered? (Note: Assume a 365-day year)