Candy Corporation sells a product for $25 with costs of $20 per unit. Candy uses a 12% rate of return for all its calculations. The CFO estimates that there is a 25% probability of a prospective new customers seeking credit will go bankrupt within the next 6 months. Customer wishes to place an order for 2,500 units of the product

A) Do not extend credit; total loss of $5,300
B) Extend credit; total benefit of $5,500
C) Extend credit; total benefit of $5,300
D) Do not extend credit; total loss of $5,500

Answer: C) Extend credit; total benefit of $5,300