Calculating initial investment Vastine Medical, Inc., is considering replacing its existing computer system, which was purchased 3 years ago at a cost of $319,000. The system can be sold today for $192,000. It is being depreciated using MACRS and a 5-year recovery period (see the table B). A new computer system will cost $501,000 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 $192,000. c. Calculate the initial investment associated with the replacement project. x Data table First Four Property Classes 10 years 3 years 33% 45% 15% 7% Recovery year 1 2 3 4 5 6 7 8 9 10 11 Totals Percentage by recovery year* 5 years 7 years 20% 14% 32% 25% 19% 18% 12% 12% 12% 9% 5% 9% 9% 4% 10% 18% 14% 12% 9% 8% 7% 6% 6% 6% 4% 100% Check answer 100% 100% 100%