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Your company is considering granting credit to a new customer for a one time sale. The variable cost per unit is $30; the current price per unit is $60; and the monthly required return (cost of capital) is 2%. What probability of default for the new customer would make the firm break even when granting credit for the one time

Your company is considering granting credit to a new customer for a one time sale. The variable cost per unit is $30; the current price per unit is $60; and the monthly required return (cost of capital) is 2%. What probability of default for the new customer would make the firm break even when granting credit for the one time

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Your company is considering granting credit to a new customer for a one time sale. The variable cost per unit is $30; the current price per unit is $60; and the monthly required return (cost of capital) is 2%. What probability of default for the new customer would make the firm break even when granting credit for the one time sale? A) 2% B) 49% C) 51% D) 98% E) 99%
Transcribed Image Text:Your company is considering granting credit to a new customer for a one time sale. The variable cost per unit is $30; the current price per unit is $60; and the monthly required return (cost of capital) is 2%. What probability of default for the new customer would make the firm break even when granting credit for the one time sale? A) 2% B) 49% C) 51% D) 98% E) 99%
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