Vastine Medical, Inc., is considering replacing its existing computer system, which was

purchased 2 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 5-year recovery 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.

a.

Calculate the book value of the existing computer system.

b.

Calculate the after-tax proceeds of its sale for $200,000.

c.

Calculate the initial investment associated with the replacement project. what would the initial investment be if the new computer qualified for 100%bonus depreciation?