A. The EBIT in year 3 is $25,000. If the tax rate on that level of operating income is 25%, what is the Operating Cash Flow (OCF) generated in year 3? If an appropriate discount rate is 10%, what is the Present Value of the year 3 OCF?

B. Youre considering remodeling the dining room of your restaurant. Remodeling may add 10 tables of 4. If the average diner generates $45 in revenue and your net margins are 20%, how many covers or diners will you have to serve to recoup your investment? If the new dining room tables turn twice (meaning you get three seatings per dinner rush, how may days will it take to recoup your investment?