Probability of dividend payment

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Reference no: EM13114828

The expected EBIT of Krupa Co next year is $20 million with standard deviation of $4 million. The tax rate of Krupa is 30% and it has 10 million shares of common, stock. Krupa has to pay $8 million in interest and $5 million in a sinking fund.

What is the probability that Krupa will be able to pay a dividend of $1 per share next year and still have some money left over as retained earnings?

Reference no: EM13114828

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