P11-8 (similar to) E Question Help Calculating initial investment Vastine Medical, Inc., is considering replacing its existing computer system, which was purchased 3 years ago at a cost of $334,000 The system can be sold today for $196,000. It is being depreciated using MACRS and a 5-year recovery period (see the table 1). A new computer system will cost $508,000 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 $196,000. c. Calculate the initial investment associated with the replacement project i Data Table (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) 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% 20% 14% 45% 32% 25% 19% 12% 12% 12% 5% 10 years 10% 18% 14% 12% 9% 18% 15% 7% 9% 7% 6% 6% Check Answer 4% 100% Totals 100%