Xx - 09

4) (25 points) You are producing and selling backpacks. Your sales price is $100 and present value of costs is $80. You collect 25% of the price in cash immediately (at the time of sale), and allow your costumers pay the remaining amount in one month (30 days). If a customer's probability of default is 0.xx, where xx is the last two digits of your student number, should you sell your product to this customer? Assume monthly interest rate is 1%