Nike is considering changing its credit terms from net 60 to net 30 in its western Ohio sales territory. The company expects sales (all on credit) to decrease by 10% from a current level of 4 million, and it expects its average collection period to decrease from 70 days to 38 days. The bad-debt ratio should decline to 2.5% of sales from a current level of 5% of sales. The company also estimates that inventory investment would decrease by $100,000 for the expected sales decrease. The companys variable cost ratio is 0.55. Nikes required pretax rate of return on investments in receivables and inventories is 20%. Should Nike proceed with the change from the perspective of pretax profits?

Please show your work!