The Ames Company Has an Expected EBIT of $16 Million

question 84

Multiple Choice

The Ames Company has an expected EBIT of $16 million with a standard deviation of $8 million. The indifference point between a debt financing alternative and a common stock financing alternative was computed to be $12 million. Determine the probability that the equity financing alternative will be superior to the debt financing alternative (i.e., have a higher EPS) . (Problem requires normal distribution table.)

• A) 50.0%
• B) 30.85%
• C) 69.15%
• D) cannot be computed

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Definitions:

Transference

The redirection of feelings and desires, especially those unconsciously retained from childhood, onto a substitute, notably in a psychoanalytic context.

Mindfulness

The psychological process of bringing one's attention to experiences occurring in the present moment, which can be developed through the practice of meditation and other training.

Group Therapy

A form of psychotherapy involving one or more therapists working with several people at the same time, often used to address shared issues or experiences.

Social Situations

Scenarios that involve interactions with other individuals or groups within a society.