Assume a $40\%$ tax rate.

Multi$-$step question $1$:

a$.$ If a company buys $$500$ in machinery with $$250$ debt and $$250$ cash, how does

this flow through the three statements?

b$.$ A year passes: there's $10\%$ interest on debt, $$50$ annual principal paydown, and

$$100$ annual depreciation. How does this flow through the three statements?

c$.$ Another year passes. The interest, depreciation, and principal payment terms are

the same as year one. At the very end of year two, a flood causes company to

have to write down the machinery's entire value and repay the remaining loan

balance. Walk me through what happens on the statements for this second year.