A firm in the third year of depreciating its only asset, which originally cost

$ 177 comma 000$177,000

and has a 5-year MACRS recovery period

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, has gathered the following data relative to the current year's operations:

Accruals	$16,000
Current assets	110,000
Interest expense	14,200
Sales revenue	409,000
Inventory	69,800
Total costs before depreciation, interest and taxes	289,000
Tax rate on ordinary income	21%

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.