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Depreciation and accounting cash flow A firm in the third year of depreciating its only asset, which originally cost $181,000 and has a 5-year MACRS
Depreciation and accounting cash flow A firm in the third year of depreciating its only asset, which originally cost $181,000 and has a 5-year MACRS recovery period A, has gathered the following data relative to the current year's operations: Accruals Current assets Interest expense Sales revenue Inventory Total costs before depreciation, interest and taxes Tax rate on ordinary income $15,300 116,000 14,500 404,000 70,800 300,000 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. Operating Cash Flow Sales revenue $ Less: Total costs before depreciation, interest, and taxes Depreciation expense Earnings before interest and taxes Less: Taxes at 21% Net operating profit after taxes (NOPAT) $ $ Plus: Depreciation Operating Cash Flow (OCF) $
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