[14 Points] Stamford, Inc. is considering granting credit to a new customer. The variable cost per unit is $50, the current price is $110. Credit is extended for one month, and based on historical experience, payments for about 15 out of 100 such orders are never collected. The monthly required return is 1%.

a. Assuming that this is a one-time order, should it be filled? The customer will not buy if credit is not extended.

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

c. Suppose that customers who dont default become repeat customers and place the same order every month forever. Further assume that repeat customers never default. Should the order be filled? What is the break-even probability of default?