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A company is considering extending credit to a new customer. If the customer is approved, credit would be extended for 1 month. The required return
A company is considering extending credit to a new customer. If the customer is approved, credit would be extended for 1 month. The required return is 1.2% per month. The price per unit is $3,400 and the variable cost per unit is $2,200. Assume customers who don't default become repeat customers and place the same order every month forever and that a repeat customer will never default. What is the break-even probability of default?
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