=9.17.* Vincent Cuomo is the credit manager for the Fine Fabrics Mill. He is currently faced with the question of whether to extend

$100,000 of credit to a potential new customer, a dress manufacturer. Vincent has three categories for the creditworthiness of a company—poor risk, average risk, and good risk—but he does not know which category fits this potential customer. Experience indicates that 20 percent of companies similar to this dress manufacturer are poor risks, 50 percent are average risks, and 30 percent are good risks. If credit is extended, the expected profit for poor risks is $15,000, for average risks $10,000, and for good risks $20,000. If credit is not extended, the dress manufacturer will turn to another mill. Vincent is able to consult a credit-rating organization for a fee of $5,000 per company evaluated. For companies whose actual credit records with the mill turn out to fall into each of the three categories, the following table shows the percentages that were given each of the three possible credit evaluations by the credit-rating organization.