Home Depot expects sales of $15 million this year under the current credit policy. The present credit terms is net 30 but the DSO is actually 60 days, and the bad debt loss is 5% of sales. Also, Home Depots cost of capital is 15%, and its total variable costs is running at 60% of sales. Since Home Depot wants to improve its profitability, the Finance Manager is proposing to change the credit term to 2/10, net 30. The Finance Manager predicts that sales would increase by $500,000 as a result and that 50% of all customers would take advantage of the new discount with the rest paying on time. The bad debt loss would fall to 4%. Should the Finance Managers proposal be accepted? How much would the pre-tax profits change before and after this proposal?