Answered step by step
Verified Expert Solution
Question
1 Approved Answer
answer all please 10 years Calculating initial investment Vastine Medical Inc is considering replacing its existing computer system, which was purchased 3 years ago at
answer all please
10 years Calculating initial investment Vastine Medical Inc is considering replacing its existing computer system, which was purchased 3 years ago at a cost of $329,000 The system can be sold today for $208,000. It is being depreciated using MACRS and a 5-year recovery period (see the table ) A new computer system will cost $496,000 to purchase and install Replacement of the computer system would not involve any chang 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 i Data Table b. Calculate the after-tax proceeds of its sale for $200 000 c. Calculate the initial investment associated with the replacement project a. The remaining book value is 5 (Round to the nearest dollar Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery year Recovery year 3 years 5 years 7 years 33% 2099 1496 10% 2 4504 329 25% 189 159 19% 18% 14% 796 129 1290 12% 5 12% 990 596 999 8% 7 99 73 18 49 63 699 10 6% 11 49 Totals 100 100% 100% 100% These percentages have been rounded to the nearest whole percent to simplity calculations while Enter your answer in the answer box and then click Oneck Answer retaining realism to calculate the actual depreciation for tax purposes be sure to apply the actual unrounded percentages or directly apply double-declining balance (2009) depreciation using the half-year 2 parts Convention remaining 3 4 9Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started