River Rafts Has Determined That Its Expected EBIT for the Coming

question 34

Multiple Choice

River Rafts has determined that its expected EBIT for the coming year is $8.3 million. The EBIT is approximately normally distributed with a standard deviation of $5.1 million. If River Rafts has $1.9 million in annual interest payments, what is the probability that the firm will have negative earnings?

• A) 4.65%
• B) 10.47%
• C) 5.16%
• D) 35.20%

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