Kittle estimates it$$s 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 $$350$ C$$5$

$$Cost of materials $$50$ C$$150$

$$Operating expenses $$60$

$$Interest expenses $$4$ C$$10$

Cash flows $$236-$$C$155$

Kittle believes that the value of the Canadian dollar will be either $$0\mathrm{.}80$ or $$0\mathrm{.}90$ and seeks to analyze its cash flows under each of these scenarios. The following table shows Kittle$$s cash flows under each of these exchange rates.

Exchange Rate Scenario

Exchange Rate Scenario

C$$1=$$$0\mathrm{.}80$

C$$1=$$$0\mathrm{.}90$

$($Millions$)$

$($Millions$)$

Sales

$(1)$ U$.$S$.$ Sales $$350$ $$350$

$(2)$ Canadian Sales C$$5$ X $$0\mathrm{.}80=$ $$4\mathrm{.}00$ C$$5$ X $$0\mathrm{.}90=$ $$4\mathrm{.}50$

$(3)$ Total sales in U$.$S$.$ $ $$354\mathrm{.}00$ $$354\mathrm{.}50$

Cost of Materials and Operating Expenses

$(4)$ U$.$S$.$ Cost of Materials $$50$ $$50$

$(5)$ Canadian Cost of Materials C$$150$ X $$0\mathrm{.}80=$ $$120\mathrm{.}00$ C$$150$ X $$0\mathrm{.}90=$ $$135\mathrm{.}00$

$(6)$ Total Cost of Materials in U$.$S$.$ $ $$170\mathrm{.}00$ $$185\mathrm{.}00$

$(7)$ Operating Expenses $$60$ $$60$

Interest Expense

$(8)$ U$.$S$.$ Interest Expense $$4$ $$4$

$(9)$Canadian Interest Expense C$$10$ X $$0\mathrm{.}80=$ $$8\mathrm{.}00$ C$$10$ X $$0\mathrm{.}90=$ $$9\mathrm{.}00$

$(10)$ Total Interest Expenses in U$.$S$.$ $$12\mathrm{.}00$ $$13\mathrm{.}00$

Cash Flows in U$.$S$.$$ before Taxes $$112\mathrm{.}00$ $$96\mathrm{.}50$

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