P11-8 (similar to) Question Help Calculating initial investment Vastine Medical, Inc. is considering replacing its existing computer system, which was purchased 2 years ago at a cost of $326.000. The system can be sold today for $198.000. It is being depreciated using MACRS and a 5-year recovery period (see the table 1). A new computer system will cost $490,000 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 $198.000 c. Calculate the initial investment associated with the replacement project. a. The remaining book value is $ Data Table (Click on the icon here in order to copy the contents of the data table below 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 10 years 33% 20% 14% 10% 45% 32 25% 18% 15% 19% 18% 14% 12% 12% 12% 12% 9% 75 9% 9% 8% 9% 6% TO nter your answer in the answer by 6% 49 100% Totals 100% 100% "These percentages have been rounded in the name 100%