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please read questions because its third time no one can help Depreciation and accounting cash flow A firm in the third year of depreciating its
please read questions because its third time no one can help
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 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 $15,000 120,000 15,000 400,000 70,000 290,000 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. a. Complete the following table to determine the operating cash flow (OCF): (Round to the nearest dollar.) Operating Cash Flow Sales revenue A 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) A A Less: Taxes at 21% Net operating profit after taxes (NOPAT) Plus: Depreciation Operating Cash Flow (OCF) Solution :- @ Operating cash flow First of all, we will calculate the amount of depre- ciation of the assef, which originally cost $180,000 and its third (year of the passet. Depreciation Rate for pold year as per & year MACRS Depreciation schedule is 19.20 So, the depreciation amount - 19207/ of $ 180,000 Flos y $ 180,000 100 $34,560 cash How ! calculation of operating Sales Revenue 400,000 Less! Total cost before ) Depreciation, Tinterest & 290,000 Depreciation Expense 34,560 Earning Before Interest & Taxes $ 75,440 Less! Taxes @ 214. 15,842.40 Net operating Profit After $ 59,597.60 Tax (NOPAT)Step by Step Solution
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