Initiating an early payment discount Gardner Company currently makes all sales on credit and offers no discount. The firm is considering offering a 2% discount for payment within 30 days. The firm's current average collection period is 60 days, sales are 40,000 units per month, selling price is $43 per unit, and variable cost per unit is $33. The firm expects that the change in credit terms will result in an increase in sales to 43,000 units, that 70% of the customers (and 70% of the dollar volume of sales) will take the discount and pay on day 30 , and the other customers will continue to pay the full invoice on day 60 . The company's cost of capital is 0.5% per month. Should it offer the discount? (Note: Assume a 365-day year.) The additional profit contribution from additional sales is $ (Round to the nearest dollar.) The amount of cost that will be saved due to the reduction in average AR is $ (Round to the nearest dollar.) The cost of early payment discount to customer is $ (Round to the nearest dollar.) The net profit from the proposed discount is $ (Round to the nearest dollar.) Should the proposed discount be offered? (Select the best answer below.) Yes No