The owner of a bicycle repair shop forecasts revenues of $208,000 a year. Variable costs will be $62,000, and rental costs for the shop are $42,000 a year. Depreciation on the repair tools will be $22,000.

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

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.