Final answer:
The break-even Probability of Default for a company assessing granting credit to a new customer can be calculated using the formula: (Variable Cost per Unit / Price) * (1 + Monthly Required Return). Substituting the values given in the question will give the break-even Probability of Default.
Step-by-step explanation:
It seems like you're trying to calculate the break-even Probability of Default (PD) for a company assessing the creditworthiness of a new customer. However, the information provided (variable cost per unit, current price, and monthly required return) doesn't directly relate to credit risk or PD calculation.
To calculate the break-even PD, you typically need information related to the credit risk, such as the expected loss given default (ELGD), exposure at default (EAD), and the risk-free rate.
If you have the necessary credit risk parameters, you can use the following formula to calculate the break-even PD:
Break-even PD
=
ELGD
×
EAD
Price
×
(
1
+
Required Return
)
Break-even PD=
Price×(1+Required Return)
ELGD×EAD
Where:
ELGD is the Expected Loss Given Default,
EAD is the Exposure at Default,
Price is the current price of the product or service,
Required Return is the monthly required return.
Please provide more information on the credit risk parameters if you have them, or clarify the context so I can better assist you.