ASG Expects Next Year's Operating Income (EBIT) to Equal $22

Multiple Choice

ASG expects next year's operating income (EBIT) to equal $22 million, with a standard deviation of $16 million. The coefficient of variation of operating income is equal to 0.73. Interest expenses will be $9 million next year and debt retirement will require a principal payment of $2.5 million. ASG's marginal tax rate is 40%. If EBIT is normally distributed, what is the probability that ASG will have a negative EPS next year? (Problem requires a normal distribution table.)

A) 20.9%
B) 25.5%
C) 23.3%
D) 25.8%