Your Current Sales Consist of 60 Units Per Month at a Price

Your current sales consist of 60 units per month at a price of $95 a unit. You are considering switching to a net 30 credit policy from your current cash only policy. If you switch, the credit price will be $100 and the cash price will be $95 a unit. The monthly interest rate is 1.25 percent. What is the break-even default rate of the proposed switch?

A) 3.78 percent
B) 3.81 percent
C) 3.97 percent
D) 4.00 percent
E) 4.05 percent