A corporation has decided to replace an existing machine with a newer model. The old machine had an initial purchase price of $35,000, and has $20,000 in accumulated depreciation. If the 40% tax rate applies to the corporation and the old asset can be sold for $14,000, what will be the tax effect of the replacement?

Group of answer choices

Refund of $400

Loss of $400

Refund of $2,000

Loss of $2,000

No tax effect