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| Topic: |
Biographies
|
| Number of pages / Number of words: |
4 / 980 |
Essay's paper body
be less than the indifference point) is:
Where z = the number of standard deviations away from the mean
X = the point of interest
(= the standard deviation of the probability distribution
( = the mean of the probability distribution
The negative sign indicates that the point of interest (X) or (indifference point) lies on the left-hand side of the mean...
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It lies .6822 of 1 standard deviation away from the mean.
Going to the table for Values of the Standard Normal Distribution Function we find the area under the curve between the point of interest and the mean of the distribution to be:
.2517 or 25.27%
Therefore the probability that EBIT will exceed the indifference point (favouring debt financing) is 75...
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