P44 Depreciation and accounting cash flow A firm in the third year of depreciating its only asset,

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P4–4 Depreciation and accounting cash flow A firm in the third year of depreciating its only asset, which originally cost $180,000 and has a 5-year MACRS recovery period, has gathered the following data relative to the current year’s operations.

a. Use the relevant data to determine the operating cash flow (see Equations 4.2 and 4.3) for the current year.

b. Explain the impact that depreciation, as well as any other noncash charges, has on a firm’s cash flows.

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Principles Of Managerial Finance

ISBN: 9780133546408

7th Edition

Authors: Lawrence J Gitman, Chad J Zutter

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Question Posted: Sep 19, 2024 02:19 PM

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P44 Depreciation and accounting cash flow A firm in the third year of depreciating its only asset,

Question:

Accruals Current assets $ 15,000 120,000 15,000 Interest expense Sales revenue 400,000 Inventory 70,000 Total costs before depreciation, interest, and taxes 290,000 Tax rate on ordinary income 40%

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Principles Of Managerial Finance

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