Pay interest-sinking fund and preferred dividends

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Reference no: EM13933736

Goiania Corporation is expecting to have EBIT next year of $11 million, with a standard deviation of $7 million. Goiania has $35 million in bonds with coupon of 8%, selling at par which is being retired at the rate of $2.5 million annually. Goiania also has 200,000 shares of preferred stock, which pays annual dividend of $5.25 per share. The tax rate of Goiania is 35%. Calculate the probability that Goiania will not be able to pay interest, sinking fund, and preferred dividends, out of its current income, next year. Answer: 34.78% Show solutions

Reference no: EM13933736

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Pay interest-sinking fund and preferred dividends : Goiania Corporation is expecting to have EBIT next year of $11 million, with a standard deviation of $7 million. Goiania has $35 million in bonds with coupon of 8%, selling at par which is being retired at the rate of $2.5 million annually. Calculate..

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