Considering purchasing new more efficient extractor

Assignment Help Financial Management

Reference no: EM131179774

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

Reference no: EM131179774

Questions Cloud

What conditions are peace operations likely to be successful : Questions are often raised about the effectiveness of the United Nations in conflict resolution and peace operations. Under what conditions are peace operations likely to be successful?

Problems that firm had in issuing the convertible securities : Write a case study of a firm that has issued convertible securities (preferred or bond). Discuss why the firm issued the convertible securities. Discuss problems that firm had in issuing the convertible securities. Review a convertible bond issued. D..

Who was the victim of the cyberterrorism campaign : Who was the victim of the cyberterrorism or information warfare campaign? Who was the aggressor in the cyberterrorism or information warfare campaign?

How does change impact motivation of employees : Discuss how employers will explain about the training that will be offered to all employees and how employee job skills will change with the implementation.

Considering purchasing new more efficient extractor : 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 mo..

Why do the negative health effects associated with thinness : Why do the negative health effects associated with thinness and attempts to be thin receive relatively little attention when compared with the focus that has been put on obesity? Why should employers be concerned about the negative health effects ..

How does healthcare policy impact various stakeholders : Your presentation should be 8-10 slides. Include substantive slide notes that would lay out the text you would speak in an audience centered presentation. Review the grading rubric, which can be accessed in this week's folder. Your presentation sh..

Types of events you are planning : Rosie Ann Krauses restaurant or Restort one- to two-pages (not including title and reference pages), describe an event planning business you would like to start. You will use this business for your Final Paper. Provide an explanation of the natur..

Loan origination fee-the loan value : 30 years mortgage at 5% per year with 10% down payment. Loan origination fee 1% of the loan value. Taking over the owner mortgage that has another 23 years to run on an initial value of $85,000, at 4% per year. In order to take over the mortgage, you..

User Account

All Pages