$5$ HW $($Ch$.$

Question $11,$ P$11-11($similar to$)$

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$11$ points

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Calculating initial cash flow Vastine Medical, inc, is considering replacing its existing computer system, which was purchased $2$ years ago at a cost of $$322,000.$ The system can be sold todsy for $$203,000.$ It is being depreciated using MACRS and a $5-$year recovery perlod $($see the table $).$ A new computer systom will coat $5506,000$ to purchase and instal. Replacement of the computer system would not involve any change in net woking capilal. Assume a $21\%$ tax rate on ondinary income and captal gains.

$2.$ Calculate the book value of the existing computer system.

b$.$ Calculate the aftee$-$tax proceeds of is sale for $$203,000.$

c$.$ Calculate the intial cash flow associated with the replacement propect.

a$.$ The remaining book value is $ $($Round to the searest dollar.$)$

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Get more help :Data table

$\backslash$table$[[($Click on the icon here O 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$],[1,33\%,20\%,14\%,10\%],[2,45\%,32\%,25\%,18\%],[3,15\%,19\%,18\%,14\%],[4,7\%,12\%,12\%,12\%],[5,,12\%,9\%,9\%],[6,,5\%,9\%,8\%],[7,,,9\%,7\%],[8,,,4\%,6\%],[9,,,,6\%],[10,,,,6\%],[11,,,,4\%],[$Totals$,100\%,100\%,100\%,100\%],["$These percentages have been rounded to the nearest whole percent to simplify calculations while retaining realism. To calculate the actual depreciation for tax purposes, be sure to apply the actual unrounded percentages or drectly apply double$-$declining balance $(200\%)$ depreciation using the hall$-$year convention.$]]$

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