Question

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	10 years
1	3333?%	2020?%	1414?%	1010?%
2	4545?%	3232?%	2525?%	1818?%
3	1515?%	1919?%	1818?%	1414?%
4	77?%	1212?%	1212?%	1212?%
5		1212?%	99?%	99?%
6		55?%	99?%	88?%
7			99?%	77?%
8			44?%	66?%
9				66?%
10				66?%
11				44?%
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.

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

Accruals	$14,600
Current assets	129,000
Interest expense	14,000
Sales revenue	415,000
Inventory	69,100
Total costs before? depreciation, interest and taxes	287,000
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.)

Operating Cash Flow
Sales revenue	$	415000
Less: Total costs before depreciation, interest, and taxes		287000
Depreciation expense		34390
Earnings before interest and taxes	$
Less: Taxes at 40%
Net operating profit after taxes (NOPAT)	$
Plus: Depreciation
Operating Cash Flow (OCF)

Answer 1