A company needs to decide whether or not to grant credit to a new customer for a
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Question:
A company needs to decide whether or not to grant credit to a new customer for a one-time sale. The price per unit is $60,000 and variable cost per unit is $40,000. If the customer is granted credit and does not defaut, they will pay a month following the date of the credit sale. What is the break-even probability of default for this customer if the monthly interest rate is 1.25%?
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