Smith Corp.produces a product that generates repeat orders on an annual basis.The product has a current price of $2,500 and a current cost of $2,100.The company uses a 15% opportunity cost of capital.Due to the product's high cost,there is a 17% chance that each new customer will default on payment.If the customer does not default,then business from that customer forms an infinite annuity income stream.What is the expected profit and break-even probability from granting credit under these conditions?

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The Answer of Smith Corp.produces a product that generates repeat orders on an annual basis.The product has a current price of $2,500 and a current cost of $2,100.The company uses a 15% opportunity cost of capital.Due to the product's high cost,there is a 17% chance that each new customer will default on payment.If the customer does not default,then business from that customer forms an infinite annuity income stream.What is the expected profit and break-even probability from granting credit under these conditions?