1) Here are simplified financial statements for Watervan Corporation:

INCOME STATEMENT (Figures in $ millions) $14, eoo Net sales Cost of goods sold Other expenses Depreciation Earnings before interest (EBIT) Interest expense Income before tax Taxes (at 3%) Net income Dividends and taxes 4, 510 4, 212 2, 788 2 490 730 1, 760 528 1, 232 946