HW-241 Blums Inc

Blums, Inc., expecs its operating income over the coming year to equal $1.5 million, with a standard deviation of $300,000. Its coefficient of variation is equal to 0.20. Blums must pay interest charges of $700,000 next year and preferred stock dividends of $240,000. Blums' marginal tax rate is 40 percent. What is the probability that Blums will have negative earnings per share next year? (Assume that operating income is normally distributed.)


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