Next year’s EBIT for the Latrobe Company is approximately normally distributed with an expected value of $8 million and a standard deviation of $5 million. The firm’s marginal tax rate is 40 percent. Fixed financial charges (interest payments)

next year are $1.5 million.

a. What is the probability that Latrobe will have a negative EPS?

b. What is the probability that Latrobe will have a positive EPS? P-9687