The following are the cash flows of two projects:

$\backslash$

The owner of a bicycle repair shop forecasts revenues of $$232,000$ a year. Variable costs wihbe $$68,000,$ and rental costs for the shop are $$48,000$ a year. Depreciation on the repair tools will be $$28,000.$

a$.$ Prepare an income statement for the shop based on these estimates. The tax rate is $20\%.$

$\backslash$table$[[$INCOME STATEMENT$],[,],[,],[,],[,],[,],[,],[,]]$

b$.$ Calculate the operating cash flow for the repair shop using the three methods given below:

i$.$ Dollars in minus dollars out.

ii$.$ Adjusted accounting profits.

iii. Add back depreciation tax shield.

$\backslash$table$[[$Methods of Calculation,$\backslash$table$[[$Operating$],[$Cash Flow$]]],[$i$.$ Dollars in Minus Dollars Out,$],[$ii Adjusted Accounting profits,$],[$iii$.$ Add back depreciation tax shield,$]]$table$[[$Year$,$Project A$,$Project B$],[0,$$$(300),$$$(300)$