Scherr Corporation’s current EPS is $5.00 at a sales level of $10,000,000. At this sales level, EBIT is $2,000,000. Scherr’s DCL has been estimated to be 2.0 at the current level of sales. Sales are forecast to have an expected value of $11,000,000 next year, with a standard deviation of $500,000. The coefficient of variation of sales is equal to 0.045. What is theprobability that EPS will be less than $5.00 per share next year, assuming that sales are normally distributed?
Question:Scherr Corporation’s current EPS is $5.00 at a sales level of $10,000,000. At this sales level,EBIT is $2,000,000. Scherr’s DCL has been estimated to be 2.0 at the current level of…
