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Gulf united wants to decide whether to utilize an old supercomputer or invest in a new bigdata machine. Gulf United is in the 40% tax

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Gulf united wants to decide whether to utilize an old supercomputer or invest in a new bigdata machine. Gulf United is in the 40% tax bracket and cost of capital of 10%. The conditions of the upgrade the original version or replace with the new version for bigdata facilities and supercomputers are as follows: Upgrade the original version: Initial cost of old big data - $ 150,000 Annual depreciation of $ 15,000 The old big data facilities were purchased 5 ycars ago The current book value of old bigdata = $ 75,000 The salvage value of old bigdata (today)= $ 95,000 The salvage value in 5 ycars =S 20,000 Replace with the new version: . . Initial cost of new bigdata - S 250,000 Its anticipated to have 5 years life The salvage value in 5 years = SO Cost savings per ycar = S 75,000 per year The company will use 3-years of MACRS depreciation. . TABLE 1 Year 3-Year 15-Year 20-Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 MACRS Half-Year Convention Depreciation Rate for Recovery Period 5-Year 7-Year 10-Year 33.33% 20.00% 14.29% 10.00% 44.45 32.00 24.49 18.00 1481 19.20 17.49 14.40 7.41 11.52 12.49 11.52 11.52 8.93 9.22 5.76 8.92 7.37 8.93 6.55 4.46 6.55 6.56 6.55 3.28 5.00% 9.50 8.55 7.70 6.93 6.23 5.90 5.90 5.91 5.90 5.91 5.90 5.91 5.90 5.91 2.95 3.750% 7.219 6.677 6.177 5.713 5.285 4.888 4.522 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 2.231 a. Find the after-tax salvage value of old big data in Yr.o b. Calculate incremental net capital spending in Yr.o c. Find the after-tax salvage value of old big data in Yr.5 d. Calculate the operating cash flows (OCF) from Yr.1 - Yr.5

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