Explore BrainMass
Share

Probability of a dividend payment

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

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?

© BrainMass Inc. brainmass.com March 21, 2019, 10:46 pm ad1c9bdddf
https://brainmass.com/business/business-math/probability-dividend-payment-430788

Solution Preview

Please see the attached file for proper format:

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 ...

Solution Summary

The solution calculates probability of a dividend payment.

$2.19