5)

Zeke's Zebra Farm				Zeke's Zebra Farm
Balance sheets as of July 31 2021 and Aug.31 2021 (in $1,000s CDN)				August Income Statement (in $1,000s CDN)
	July	August		Net sales	$4,850
Cash	$1,225	$1,313		Cost of goods sold	$3,150
Accounts rec.	$987	$1,089		Depreciation	$1,100
Inventory	$1,923	$1,988		EBIT	$600
Current assets	$4,135	$4,390		Interest paid	$456
Net fixed assets	$2,800	$2,782		Taxable income	$144
Total assets	$6,935	$7,172		Taxes	$29
				Net income	$115
	July	August
Accounts payable	$998	$1,059
Notes payable	$187	$223
Current liabilities	$1,185	$1,282
Long-term debt	$1,950	$2,928
Retained earnings	$3,800	$2,962
Total L&E	$6,935	$7,172
2. Use the balance sheet and income statement above, to complete the following:				$2,950	$3,108
*Parts A - H refer to August month-end.

A. What is the change in net working capital?
B. What is the net capital spending?
C. What is the OCF?
D. What is the cash flow from assets?
E. What is the ending net working capital?
F. What is the net new equity?
G. What is the cash flow to stockholders?
*A dividend of $115.20 was paid.
H. What is the cash flow to creditors?
I. Prove that the cash flow equation is in balance

A) The Adagio Corporation recently purchased a long-term asset for $580,250,000. The company's CFO expects that the asset will have a 15 year life. The asset has a 28% CCA rate. At the end of year 15, it is expected that the company will be able to sell the asset for $2.5 million. Given this information, determine the value of the terminal loss or recapture at the end of year ten.

B) Adagio's effective tax rate is 25%. How much tax will the company save in year thirteen, due to the inclusion of CCA in the income statement?