1.Find the breakeven EBIT if the firm has $250m with a rate of 2.3% and $15m of preferred stock which has a $1.01 dividend per share. The firm has a 40% tax rate.

a.A firm hasa EBIT indifference point of $165m and an expected EBIT of $200m with a standard deviation of $50m.

What is the z-score?

What is the probability that the firm will have a higher EPS if it usesequity?

b.What is the cashflow at the end of the recession if the firm starts with $123m of cash and expects to bring in $58m of cash during the recession?

c.A firm hasa loss level EBIT of $175m and an expected EBIT of $200m with a standard deviation of $50m.

What is the z-score?

What is the probability that the firm WILL have a negative EPS?