Redo Problem 14.15 the following additional information. The old switching system has been fully depreciated.

Question:

Redo Problem 14.15 the following additional information.
• The old switching system has been fully depreciated.
• The new system falls into a five-year MACRS property class.
• The company's marginal tax rate is 40%, and the firm uses a 10% after-tax Problem 14.15
The Advanced Robotics Company is faced with the prospect of replacing its old call-switching system, which has been used in the company's headquarters for 10 years. This particular system was installed at a cost of $100,000, and it was assumed that it would have a 15-year life with no appreciable . The current annual operating costs for the old system are $20,000, and these costs would be the same for the rest of its life. A sales representative from North Central Bell is trying to sell the company a computerized switching system that would require an investment of $200,000 for installation. The economic life of this computerized system is estimated to be 10 years, with a of $18,000, and the system will reduce annual operating costs to $5,000. No detailed agreement has been made with the sales representative about the disposal of the old system. Determine the ranges of resale value associated with the old system that would justify installation of the new system at a of 14%. Salvage Value
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