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TABLE 4.2 Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Recovery year 3 years 33% Percentage by recovery year? 5 years 20% 14% 32 25 7 years 1 10 years 2 10% 45 18 3 15 19 18 14 4 7 12 12 12 5 12 9 9 6 S 9 8 7 9 7 8 4 6 9 6 10 6 11 Totals 100% 100% 100% 100% 2. These percentages have been rounded to the nearest whole percent. 11-11 Calculating initial cash flow Vastine Medical Inc. is replacing its computer system, which was purchased two years ago at a cost of $325,000. The system can be sold today for $200,000. It is being depreciated using MACRS and a five-year recov- ery period. A new computer system will cost $500,000 to purchase and install. Replacement of the computer system would not involve any change in net working capital. Assume a 21% tax rate. Calculate the book value of the existing computer system (see Table 4.2). b. Calculate the after-tax proceeds of its sale for $200,000. c. Calculate the initial cash flow associated with the replacement project. a. 11. Caseid the nunhan of