Initiating a cash discountGardner Company currently makes all sales on credit and offers no cash discount. The firm is considering offering a 3% cash discount for payment within 15 days. The firm's current average collection period is 60 days, sales are 40,000units, selling price is $47 per unit, and variable cost per unit is $30. 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 firm's required rate of return on equal-risk investments is 25%, should the proposed discount be offered?(Note:Assume a 365-day year.)

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Part 1

The additional profit contribution from additional sales is $enter your response here.

(Round to the nearest dollar.)

Part 2

The amount of cost that will be saved due to the reduction in average A/R is$enter your response here.(Round to the nearest dollar.)

Part 3

The cost of extending the cash discount to customer is $enter your response here. (Round to the nearest dollar.)

Part 4

The net profit from the proposed cash discount is $enter your response here.(Round to the nearest dollar.)

Part 5

Should the proposed cash discount be offered?Yes or No(Select the best answer below.)