Jovic Household Products wishes to speed up collection of its receivables. Jovic currently offers credit terms of net 30. It is considering changing to terms of 2/10, net 30. The collection period is expected to be reduced from 50 to 30 days. The percentage of customers paying within the discount period is expected to be 30 percent. Bad debt losses will drop from 6 percent of sales to 4 percent. The inventory level is expected to increase by $300,000. Annual billings are $50 million. The variable cost ratio is 75 percent. The pretax return on funds made available by this change in policy is 10 percent. Assuming the change in terms is made; determine the net effect on Jovic’s pretax profits.