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.

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If the Canadian dollar appreciates, it means that it has strengthened against the U.S. dollar. Therefore, Whitewater Co. would receive less revenue in U.S. dollars from its Canadian sales, resulting in a decrease in earnings before interest and taxes. On the other hand, the cost of materials and interest expense in Canadian dollars would decrease, resulting in a lower Canadian dollar cost for the company. This would increase the dollar value of Whitewater's cash flows, as they would now have to spend less U.S. dollars to pay for their Canadian expenses.