Kittle estimates its cash flows from both the U.S., in dollars, and Canada, in Canadian dollars, for a typical quarter. These figures are summarized in the following table.

	U.S.	Canada
Sales	$310	C$4
Cost of materials	$55	C$150
Operating expenses	$65
Interest expenses	$5	C$10
Cash flows	$185	-$C156

Kittle believes that the value of the Canadian dollar will be either $0.70 or $0.80 and seeks to analyze its cash flows under each of these scenarios. The following table shows Kittles cash flows under each of these exchange rates.

	Exchange Rate Scenario		Exchange Rate Scenario
	C$1=$0.70		C$1=$0.80
	(Millions)		(Millions)
Sales
(1) U.S. Sales	$310		$310
(2) Canadian Sales	C$4 X $0.70 = $2.80		C$4 X $0.80 = $3.20
(3) Total sales in U.S. $	$312.80		$313.20
Cost of Materials and Operating Expenses
(4) U.S. Cost of Materials	$55		$55
(5) Canadian Cost of Materials	C$150 X $0.70 = $105.00		C$150 X $0.80 = $120.00
(6) Total Cost of Materials in U.S. $	$160.00		$175.00
(7) Operating Expenses	$65		$65
Interest Expense
(8) U.S. Interest Expense	$5		$5
(9)Canadian Interest Expense	C$10 X $0.70 = $7.00		C$10 X $0.80 = $8.00
(10) Total Interest Expenses in U.S.	$12.00		$13.00
Cash Flows in U.S.$ before Taxes	$75.80		$60.20

For Kittle Co., a stronger Canadian dollar has a stronger influence on Canadian dollar (outflows/inflows) than it does on Canadian dollar (outflows/inflows) .