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Kaufman Industries expects next year's operating income (EBIT) to equal $4 million, with a standard deviation of $2 million. The coefficient of variation of operating income is equal to 0.50. Interest expenses will be $1 million, and preferred dividends will be $600,000. Debt retirement will require principal payments of $1 million.
Kaufman's marginal tax rate is 40 percent. If EBIT is normally distributed, what is the probability that Kaufman will have negative EPS next year?
The spot term structure for T-Bills (proxy for the risk free rate) is as follows 30-Day T-Bill=7% per annum, 60-Day T-Bill=7.25% per annum, 90-Day T-Bill=7.5% per annum, 180-Day T-Bill=7.65% per annum and the 270-Day T-Bill=7.85% per annum all with c..
Why are the money and capital markets important? What factors characterize the instruments of the money and capital markets? What are the two ways money can be exchanged in the economy?
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