A U.S. company has sales to Canada amounting to C$5 million. Its

A U.S. company has sales to Canada amounting to C$5 million. Its cost of materials attributable to the purchase of Canadian goods is C$7 million. Its interest expense on Canadian loans is C$5 million. (1) Calculate the dollar value of the company’s cash flows at an exchange rate of C$/US$.90; (2) Would the dollar value of the company’s cash flows increase or decrease with an exchange rate of C$/US$.95 and by how much? Show how you derive your answer.