1. Given the following income statement data for a local business:

Net sales = $16,500

Cost of goods sold = $10,350

Depreciation = $1120

Interest expense = $900

Tax rate is 34%

a. Calculate net income

b. Calculate operating cash flow

c. Is this company able to cope with a short-term downturn in profitability? Explain your answer.

2. A firm has recently purchased equipment at a cost of $250,000 with a CCA rate of 25%. Under the Half Year rule, what is the amount of depreciation that the firm can claim as a tax deductible expense in its second year?

3. Moncton Corporation has sales of $255M, operating costs of $175M, and depreciation of $32M. It also has interest costs of $8m and its tax rate is 20%.

Moncton made a net investment in operating capital of $30m during the year. If the companys share price is $17.50 and it has 12m shares outstanding, does Moncton have sufficient free cash flow to repurchase 10% of its shares?