$3.$Credit Analysis $[$LO$2]$ Silicon Wafers, Inc. $($SWI$),$ is debating whether or

not to extend credit to a particular customer. SWl$\text{'}$s products, primarily used

in the manufacture of semiconductors, currently sell for $$975$ per unit. The

variable cost is $$540$ per unit. The order under consideration is for $15$ units

today; payment is promised in $30$ days.

a$.$ If there is a $20$ percent chance of default, should SWI fill the order? The

required return is $2$ percent per month. This is a one$-$time sale, and the

customer will not buy if credit is not extended.

b$.$ What is the break$-$even probability in part $($a$)?$

c$.$ This part is a little harder. In general terms, how do you think your answer

to part $($a$)$ will be affected if the customer will purchase the merchandise for

cash if the credit is refused? The cash price is $$910$ per unit.