What is the probability that Sitco will run out of cash during the coming year?

Sitco has a total of $12 million in cash and marketable securities. Free cash flows during the coming year are expected to be $47 million with a standard deviation of $31 million. Assume that Sitco's free cash flows are approximately normally distributed. What is the probability that Sitco will run out of cash during the coming year?


a.29.98%


b.34.83%


c.97.13%


d.2.87%

What is the probability that Sitco will run out of cash during the coming year?
Mean is 47. SD is 31. You want the P ( Cash %26lt; -12M). That's 1.9 SDs.





P ( Z %26lt; -1.9) = 2.87%
Reply:It depends.

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