Depreciation and accounting cash flow A firm in the third year of depreciating its only asset, which originally cost $182,000 and has a 5-year MACRS recovery period A, has gathered the following data relative to the current year's operations: $14,800 125,000 15,100 Accruals Current assets Interest expense Sales revenue Inventory Total costs before depreciation, interest and taxes Tax rate on ordinary income 406,000 69,900 286,000 40% 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 firm's cash flows. a. Complete the following table to determine the operating cash flow (OCF): (Round to the nearest dollar.) Operating Cash Flow $ Sales revenue Less: Total costs before depreciation, interest, and taxes Depreciation expense Earnings before interest and taxes $ Less: Taxes at 40% $ Net operating profit after taxes (NOPAT) Plus: Depreciation Operating Cash Flow (OCF) $ 10 years 2 9% Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery year* Recovery year 3 years 5 years 7 years 1 33% 20% 14% 10% 2 45% 32% 25% 18% 3 15% 19% 18% 14% 4 7% 12% 12% 12% 5 12% 9% 6 5% 9% 8% 7 9% 7% 8 4% 6% 9 6% 10 6% 11 4% Totals 100% 100% 100% 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