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P11-11 (similar to) Question Help its existing computer system, which was Calculating initial investment Vastine Medical, Inc., is considering replacing i purchased 2 years ago at a cost of $331,000. The system can be sold today for $205,000. It is being depreciated using MACRS and a 5-year recovery period (see the table EB). A new computer system will cost $510,000 to purchase and install. Replacement of the computer system would not involve any change in net working capital. Assume a 40% tax rate on ordinary income and capital gains a. Calculate the book value of the existing computer system. b. Calculate the after-tax proceeds of its sale for $205,000. c. Calculate the initial investment associated with the replacement project. a. The remaining book value is s ( (Round to the nearest dollar.) Enter your answer in the answer box and then click Check Answer. parts remaining Clear All Check AnswerData Table 1 5 years7 years10 years 14% Recovery year 3 years 10% 18% 14% 4% 100% 100% Totals 100% er Print Done

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