The owner of a bicycle repair shop forecasts revenues of $240,000 a year. Variable costs will be $70,000, and rental costs for the shop are $50,000 a year. Depreciation on the repair tools will be $30,000. The tax rate is 30%.

a. Calculate operating cash flow for the year by using all three methods: (a) adjusted accounting profits; (b) cash inflow/cash outflow analysis; and (c) the depreciation tax shield approach.

Method Operating Cash Flow

Adjusted accounting profits $ ______________

Cash inflow/cash outflow analysis $______________

Depreciation tax shield approach $_______________

b. Are the above answers equal?

Yes or No