Depreciation and accounting cash flow A firm in the third year of depreciating its only asset, which originally cost $172,000 and has a 5-year MACRS recovery period, has gathered the following data relative to the current year's operations:

Accruals	$15,500
Current assets	128,000
Interest expense	14,900
Sales revenue	407,000
Inventory	70,400
Total costs before depreciation, interest and taxes	288,000
Tax rate on ordinary income	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 a firm's cash flows.

a. Complete the following table to determine the operating cash flow (OCF):(Round to the nearest dollar.)

Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes -I hese percentages have been rounded to the nearest whole percent to simplity 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. \begin{tabular}{ll} Operating Cash Flow & \\ \hline 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) \end{tabular}