Assume that sales are normally distributed

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Reference no: EM131336861

Scherr Corporation's current EPS is $5.00 at a sales level of $10,000,000. At this sales level, EBIT is $2,000,000. Scherr's DCL has been estimated to be 2.0 at the current level of sales.

Sales are forecast to have an expected value of $11,000,000 next year, with a standard deviation of $500,000. The coefficient of variation of sales is equal to 0.045.

What is the probability that EPS will be less than $5.00 per share next year, assuming that sales are normally distributed?

Reference no: EM131336861

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