In the previous problem, assume that the probability of default is 15 percent. Should the orders be filled now? Assume the number of repeat customers is affected by the defaults. In other words, 30 percent of the customers who do not default are expected to be repeat customers.

Data in previous problem,

Solar Engines manufactures solar engines for tractor-trailers. Given the fuel savings available, new orders for125 units have been made by customers requesting credit. The variable cost is $14,800 per unit, and the credit price is $16,100 each. Credit is extended for one period. The required return is 1.9 percent per period. If Solar Engines extends credit, it expects that 30 percent of the customers will be repeat customers and place the same order every period forever and the remaining customers will be one-time orders. Should credit be extended?