For Year 7 (the equity method applies):
• No effect on sales.
• Net income effect equals the percentage share of Francisco earnings for Year 7, or
30% of $2,200 = $660.
• Cash flow effect equals the dividend income of $360 (computed as 30% of $1,200).
If the outflow due to the stock purchase is included: Net cash flow = dividend
income less purchase price = $360 - $3,190 = $(2,830).