Depreciation and Book Cash Flow: A company in the third year of depreciation of its only asset, which originally cost $176,000 and has a MACRS payback period of 5 years (Table below), has collected the following data relating to operations of the current year:

Accurales - $ 14,500

Current Assets - 122,000

Interest expense - 14,200

Sales revenue - 401,000

Inventory - 71,000

Total cost before Depreciation, interest and taxes - 290,000

Urinary income tax rate - 40%

to. Use the relevant data to determine the operating cash flow for the current year. __________________________________________________________________________________

to. Calculate the following table to determine operating cash flow (OCF): (Round to the nearest dollar.)

operating cash flow

__________________________________

Sales revenue $401,000

Less: Total costs before depreciation, interest and taxes $290,000

Depreciation expense $?

Earnings before interest and taxes $?

Less: Taxes at 40% $?

Net operating profit after taxes (NOPAT) $?

Plus: Depreciation $?

Operating Cash Flow (OCF) $? __________________________________________________________________________________

Percentage per year of recovery*

payback year	3 years	5 years	7 years	10 years
1	33%	20%	14%	10%
2	45%	32%	25%	18%
3	15%	19%	18%	14%
4	7%	12%	12%	12%
5		12%	9%	9%
6		5%	9%	8%
7			9%	7%
8			4%	6%
9				6%
10				6%
11				4%
Totals	100%	100%	100%	100%

*These percentages have been rounded to the nearest whole percentage to simplify calculations and maintain realism. To calculate actual depreciation for tax purposes, be sure to apply the actual percentages without rounding or directly apply double declining balance (200%) depreciation using the half-year convention.

Answer rating: 100% (QA)

To calculate the operating cash flow OCF for the current year we need to follow these steps Calculat... View the full answer