Sales Campaign. Jones Corporation is considering a sales campaign in which it will offer credit terms of 3/15, net/80. The finance manager expects that the collection period will increase from 90 days...

Sales Campaign. Jones Corporation is considering a sales campaign in which it will offer credit terms of 3/15, net/80. The finance manager expects that the collection period will increase from 90 days to 110 days. Information before and during the proposed campaign follows:

Percentage of Sales before Campaign                   Percentage of Sales during Campaign

Cash sales           20           10

Payment from

1–15                      35          25

16–120                  45           65

The sales campaign is expected to raise sales from $5 million to $6 million. The gross profit rate is 30 percent and the rate of return is 16 percent. Sales discounts are given on cash sales.

Should the sales campaign be initiated?