Depreciation and accounting cash flow A fim in the thed year of depreciating is only asset, which originally cost $188,000 and has a 5-year MACRS recovery penod has gathered the following data relative to the cument year's operations Aconuals Carentanets interest expense mas Sales revenue inventory Total costs before depreciation, interest and taxes Tas rate on ordinary income Show Transcribed Text Use the relevant data to determine the operating cash flow for the curent year bExplain the impact that depreciation, as well as any other noncash charges, has on a fem's cash flows Recovery year 1 2 3 4 5 6 Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes 7 8 9 10 11 Totals $15.200 110,000 14.000 413.000 09.000 293.000 40% Show Transcribed Text Show Transcribed Text 3 years 33% 45% 3 15% 7% Percentage by recovery year 5 years 20% 32% 19% 12% 12% 5% A 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 $ Use the relevant data to determine the operating cash flow for the current year. . Explain the impact that depreciation, as well as any other noncash charges, has on a firm's cash flows. $ 7 years 14% 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) $ 25% 18% 12% 9% 9% 9% 4% $ 10 years 10% 18% 14% 12% 9% 8% 7% 6% 6% 6% 4%
Depreciation and accounting cash flow A fim in the thed year of depreciating is only asset, which originally cost $188,000 and has a 5-year MACRS recovery penod has gathered the following data relative to the cument year's operations Aconuals Carentanets interest expense mas Sales revenue inventory Total costs before depreciation, interest and taxes Tas rate on ordinary income Show Transcribed Text Use the relevant data to determine the operating cash flow for the curent year bExplain the impact that depreciation, as well as any other noncash charges, has on a fem's cash flows Recovery year 1 2 3 4 5 6 Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes 7 8 9 10 11 Totals $15.200 110,000 14.000 413.000 09.000 293.000 40% Show Transcribed Text Show Transcribed Text 3 years 33% 45% 3 15% 7% Percentage by recovery year 5 years 20% 32% 19% 12% 12% 5% A 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 $ Use the relevant data to determine the operating cash flow for the current year. . Explain the impact that depreciation, as well as any other noncash charges, has on a firm's cash flows. $ 7 years 14% 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) $ 25% 18% 12% 9% 9% 9% 4% $ 10 years 10% 18% 14% 12% 9% 8% 7% 6% 6% 6% 4%
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Transcribed Image Text:Depreciation and accounting cash flow A fim in the thed year of depreciating is only asset, which originally cost $188,000 and has a 5-year MACRS recovery penod has gathered the following data relative to the
cument year's operations
Aconuals
Carentanets
interest expense
mas
Sales revenue
inventory
Total costs before depreciation, interest and taxes
Tas rate on ordinary income
Show Transcribed Text
Use the relevant data to determine the operating cash flow for the curent year
bExplain the impact that depreciation, as well as any other noncash charges, has on a fem's cash flows
Recovery year
1
2
3
4
5
6
Rounded Depreciation Percentages by Recovery Year Using MACRS for
First Four Property Classes
7
8
9
10
11
Totals
$15.200
110,000
14.000
413.000
09.000
293.000
40%
Show Transcribed Text
Show Transcribed Text
3 years
33%
45%
3
15%
7%
Percentage by recovery year
5 years
20%
32%
19%
12%
12%
5%
A
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
$
Use the relevant data to determine the operating cash flow for the current year.
. Explain the impact that depreciation, as well as any other noncash charges, has on a firm's cash flows.
$
7 years
14%
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)
$
25%
18%
12%
9%
9%
9%
4%
$
10 years
10%
18%
14%
12%
9%
8%
7%
6%
6%
6%
4%
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