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Volcker Company follows the residual theory of dividends. It has 8 million shares of common stock, and it maintains its optimal debt/assets ratio at 25%. Its EBIT next year is expected to be $25 million, with a standard deviation of $5 million. The income tax rate of Volcker is 37% and it has to pay $3.5 million in interest. It would like to finance $15 million in new projects from retained earnings and new borrowings. Find the probability that it will be able to give a dividend of at least 45¢ next year.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91610204

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