Harbour view Hardware provides the following data:

Current annual credit sales $=12000000$

Collection period $2$ months

Terms net$/30$

Required rate of return $15\%$

The firm proposes to offer a $3/10,$ net $/30.$ The firm anticipates $25\%$ of its customers will take advantage of the discount. As a result of the discount policy, the collection period will be reduced to $112$ months.

Required:

Should the firm offer the new discount policy to its customers?