Consider X, a one -asset firm with no liabilities. Assume that the asset will generate end-of the year cash flows of $200 each year for two years and the will have zero value. The interest in the economy is 10%.

1-Prepare the income statement for year 2

2-Do we need I/S if the discount rate and future cash flows are certain? Why? What information should be on the income statement if we can not get the certainty condition?

3-Prepare the balance sheet at the end of year 2 for the company. The company pays no dividends.