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

Depreciation and accounting cash flow Accruals Current assets Interest expense Sales revenue Inventory A firm in the third year of depreciating its only asset, which originally cost $173,000 and has a 5-year MACRS recovery period O , has gathered the following data relative to the current year's operations: Total costs before depreciation, interest and taxes Tax rate on ordinary income $15, 100 129,000 14,800 407,000 70,300 294,000 400/0 a. Use the relevant data to determine the operating cash flow for the current year. b. Explain the impact that depreciation, as well as any other noncash charges, has on a firm's cash flows. a. Complete the following table to determine the operating cash flow (OCF). (Round to the nearest dollar.) More info (Click on the icon here in order to copy the contents of the data table below into a spreadsheet) Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery year* Operating Cash Flow Sales revenue Less: Total costs before depreciation, interest, and taxes Depreciation expense Eamings before interest and taxes Less: Taxes at 40% Net operating profit after taxes (NOPAT) Plus: Depreciation Operating Cash Flow (OCF) 407000 294000 Recovery year 2 3 4 5 6 7 8 9 10 11 Totals 3 years 100% 5 years 19% 12% 12% 5% 100% 7 years 12% 9% 9% 4% 100% 10 years 12% 8% 6% 6% 4% 100% *These percentages have been rounded to the nearest whole percent to simplify calculations while retaining realism. To calculate the actual depreciation for tax purposes, be sure to apply the actual unrounded percentages or directly apply double-declining balance (200%) depreciation using the half-year convention. print Done