Leigh Fibers Expects Its Operating Income Over the Coming Year

Multiple Choice

Leigh Fibers expects its operating income over the coming year to equal $2.5 million with a standard deviation of $800,000. Leigh must pay interest charges of $1.2 million next year and preferred dividends of $300,000. Leigh's marginal tax rate is 35%. What is the probability that Leigh will have negative EPS next year if its operating income is expected to be normally distributed? (Problem requires a normal distribution table.)

A) 14.7%
B) 5.2%
C) 10.6%
D) 15.7%