Regal Enterprises Is Considering the Purchase of a New Embroidering

question 120

Multiple Choice

Regal Enterprises is considering the purchase of a new embroidering machine. It is expected to generate additional sales of $400,000 per year. The machine will cost $295,000, plus $3,000 to install it. The embroiderer will save $12,000 in labor expense each year. Regal is in the 34% income tax bracket. The machine will be depreciated on a straight-line basis over five years (it has no salvage value) . The embroiderer will require annual operating expenses of $136,000. What is the annual operating cash flow that the machine will generate?

• A) $316,954
• B) $124,000
• C) $202,424
• D) $165,816

---

Definitions:

Anal Expulsive

A psychoanalytic concept suggesting a personality type that results from a child's experience during the anal stage of psychosexual development, often associated with messiness or disorganization.

Anal Retentive

Pertains to a personality trait characterized by orderliness, meticulousness, and a controlling attitude, believed by Freud to originate during the anal stage of psychosexual development.

Personality

The characteristic set of behaviors, cognitions, and emotional patterns that evolve from biological and environmental factors.

Sensual Pleasure

Refers to the gratification derived from satisfying one's senses, often relating to touch, taste, smell, sight, and sound.