DuPree Coffee Roasters, Inc., wishes to expand and modernize its facilities. The installed cost of a proposed computer-controlled automatic-feed roaster will be $130,000. The firm has a chance to sell its 5-year-old roaster for $35,900. The existing roaster originally cost $59,900 and was being depreciated straight-line over 7 years. DuPree pays taxes at a rate of 40%.

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:

Accruals: $20,100

Inventory: $49,800

Accounts payable: $39,100

Accounts receivable: $70,300

Cash: $0

Notes payable: $15,700

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