inferring cash flow from economic measurements Ralph restores finaneial reeords for organizations that have experieneed disasters, such as fires, floods, and hurricanes, and lost their finaneial records.

finaneial reporling influenees 55 Ralph' s present client lost all records, exeept for a business plan that was prepared for the Bank of Economie Analysis. This bank insists on economie valuation as the basis for accounting. Ralph finds the following data:
initial investment: 4,000 economie earnings in year 1: 400 economic earnings in year 2: 330 economic earnings in year 3: 121 Ralph also learns that (i) a constant interest rate was used throughout the analysis;
(ii) the client firm paid all available cash in dividends, so the end-of-year cash balanee was always zero; and (iii) the elient firm eeased to exist at the end of year 3 (after the final dividend was paid).
a] What interest rate was used in the analysis?
b] What dividends were paid at the end of years 1,2, and 3?
e] What was economic depreeiation in each of the 3 years?
d] What was the total economic income over the life of the elient's firm?
e] How much income would the firm have reported in each year if it had used aecrual accounting coupled with sum of the years' digits depreeiation?AppendixLO1