The credit terms of Epic Ltd to its customers are currently 2/10 net 30. The selling price of the product is R100 per unit and the only variable costs are the costs of purchasing the product. The financial manager wants to change the credit terms to 3/10 net 30. As a result of the change in credit terms, the following changes are expected: The debtors collection period will decrease from 42 days to 28 days. The credit sales will increase from 22 000 units to 26 400 units. The bad debts will decrease from 3% of sales to 2% of sales. Lastly, the percentage of the credit sales to which the discount will apply will increase from 70% to 80%.

Would the board of directors approve of the change in the credit terms to customers from 2/10 net 30 to 3/10 net 30, if the required rate of return on equal-risk investments is 18%? Motivate your answer with the relevant calculations