Look back at Example 3. Cast Irons costs have increased from $1,000 to $1,050. Assuming there is

Question:

Look back at Example 3.

Cast Iron’s costs have increased from $1,000 to

$1,050. Assuming there is no possibility of repeat orders, and that the probability of successful collection from the customer is p = .9, answer the following:

a. Should Cast Iron grant or refuse credit?

b. What is the break-even probability of collection?


Data from in Example 3

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