Tobin Fisheries currently sells to its customers on terms of $\frac{2}{11},$ net $31.$ Its average collection period is $14$ days, with $85$ percent currently taking the discount. All sales are credit sales. Upper management has expressed concern about sluggish sales, and the marketing department would like a more attractive credit package. Next year's sales are projected to be $$2\mathrm{.}75$ million. It has been estimated that with terms of $\frac{3}{11},$ net $65,$ sales next year would jump to $$3\mathrm{.}80$ million and $65$ percent of sales would take the discount, but the average collection period would increase to $31$ days. Tobin's contribution margin of $5$ percent would hold with the expansion of sales, as would its short$-$term financing cost of $11$ percent.

Should Tobin initiate the change in credit policy? $($Use $365$ days in a year.$)$

Yes

N