Paddington Inc. has sales of $525,000, fixed costs of $23,500, variable costs of 12% of sales, depreciation of $30,000. It also pays interest on a loan of $23,500 a year. Its corporate tax rate is 40%. a) If the company plans to make a net investment in operating capital of $100,000, calculate the free cash flow. Do the calculation. (3 marks) b) Is the company well placed to cope with a short-term downturn in profitability? Explain your answer. (1 mark) For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). BIU S