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Blums Inc. expects its operating income over the coming year to equal $1.4 million, with a standard deviation of $210,000. Its coefficient of variation is
Blums Inc. expects its operating income over the coming year to equal $1.4 million, with a standard deviation of $210,000. Its coefficient of variation is equal to 0.15. Blums must pay interest charges of $900,000 next year and preferred stock dividends of $180,000. 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.) Use Table V to answer the question. Round your answer to two decimal places.
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