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# Answer to Question #6675 in Statistics and Probability for Melanie

Question #6675
I need to determine the value of z so that the area under the standard normal curve in the right tail is .0505. Also, finding the area under the standard normal from z=0 to z= -3.75. Is there such a value or is it approx 0?
e. \$140.0 \$90.0 \$410.0

Explanation:
To take start capital structure (25% debt and 75% equity) we have next capital budget (from \$150 mln):
To equity capital: (100% - 65%)*\$150 mln = \$52.5 mln, capital budget = \$52.5 mln / 0.75 = \$70 mln

(1) if debt ratio is raised to 75%, the equity ratio is 25%, capital budget = \$52.5 mln / 0.25 = \$210 mln,
the increase is \$210 - \$70 = \$140 mln;
(2) retained income = (100% - 20%)*\$150 mln = \$120 mln, if 25% debt and 75% equity =&gt;
=&gt; capital budget = \$120 mln/0.75 = \$160 mln =&gt; the increase is \$160 - \$70 = \$90 mln;
(3) we have retained income \$120 mln, 75% debt and 25% equity =&gt; capital budget = \$120 mln / 0.25 = \$480 mln, the
increase is \$480 - \$70 = \$410 mln;

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