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Whitewater Co. is a U.S. company with sales to Canada amounting to C$8 million. Its cost of materials attributable to the purchase of Canadian goods is C$6 million. Its interest expense on Canadian loans is C$4 million. Given these exact figures above, the dollar value of Whitewater's "earnings before interest and taxes" would ____ if the Canadian dollar appreciates; the dollar value of Whitewater's cash flows would ____ if the Canadian dollar appreciates.

a. increase; increase

b. decrease; increase

c. decrease; decrease

d. increase; decrease

e. increase; be unaffected

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9414056

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