Parker Chemicals Purchased a Hexene Extractor 10 Years Ago for $120,000

question 56

Multiple Choice

Parker Chemicals purchased a hexene extractor 10 years ago for $120,000. It is being depreciated on a straight-line basis over 15 years to an estimated salvage value of zero. It can be sold today for $10,000. Parker is considering purchasing a new more efficient extractor that would cost $270,000 installed and would be depreciated as a 10-year MACRS asset. (The depreciation rate for year one is 10 percent for this asset.) The company's marginal tax rate is 40%. If the new extractor is purchased, annual revenues will increase by $10,000 and annual operating expenses will decrease by $10,000. What is the net cash flow in year 1?

• A) $7,600
• B) $19,600
• C) $24,200
• D) $600

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Definitions:

Self-enhancing Humor

A style of humor used to boost or maintain one's self-esteem.

Aggressive Humor

A style of humor that involves making jokes or comments at the expense of others, often incorporating elements of ridicule or sarcasm.

Psychodynamic Approach

A psychological perspective that emphasizes unconscious processes and childhood experiences in shaping behaviors and emotional states.

Free Association

A therapeutic technique in psychoanalysis where the patient voices their thoughts without reservation, revealing unconscious thoughts and feelings.