A firm in the third year of depreciating its only asset, which originally costs $171,000 and has

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A firm in the third year of depreciating its only asset, which originally costs $171,000 and has a 5-year MACRS recovery period has gathered the following data relative to the current year's operations:

Accruals $15,900

Current assets $111,000

Interest expense $15,100

Sales revenue $410,000

Inventory $69,300

Total costs before depreciation, interest and taxes $291,000

Tax rate on ordinary income 40%

Explain the impact that depreciation, as well as any other non cash charges, has on a firm's cash flows.

Related Book For answer-question

Fundamentals of Investment Management

ISBN: 978-0078034626

10th edition

Authors: Geoffrey Hirt, Stanley Block

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Posted Date: Jan 16, 2021 04:50 PM

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A firm in the third year of depreciating its only asset, which originally costs $171,000 and has

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Depreciation does not directly impact the amount of cash flow generated by a business but it is tax ... View the full answer

Fundamentals of Investment Management

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