Calculating initial investment : DuPree Coffee? Roasters, Inc., wishes to expand and modernize its facilities. The installed cost of a proposed? computer-controlled automatic-feed roaster will be $138,000. The firm has a chance to sell its 44?-year-old roaster for $35,600. The existing roaster originally cost $59,100and was being depreciated using MACRS and a? 7-year recovery period? (see the table below) . DuPree pays taxes at a rate of 40% on ordinary income and capital gains.

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 10 years

1 33% 20% 14% 10%

2 45% 32% 25% 18%

3 15% 19% 18% 14%

4 7% 12% 12% 12%

5 - 12% 9% 9%

6 - 5% 9% 8%

7 - - 9% 7%

8 - - 4% 6%

9 - - - 6%

10 - - - 6%

11 - - - 4%

Totals 100% 100% 100% 100%

a. What is the book value of the existing? roaster?

b. Calculate the? after-tax proceeds of the sale of the existing roaster.

c. Calculate the change in net working capital using the following? figures:

Anticipated Changes in Current Assets and Current Liabilities
Accruals	-$19,000
Inventory	+50,800
Accounts payable	+39,300
Accounts receivable	+69,800
Cash	0
Notes payable	+14,000

d. Calculate the initial investment associated with the proposed new roaster.