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Calculating initial investment Vastine​ Medical, Inc., is considering replacing its existing computer​ system, which was purchased 2 years ago at a cost of $321,000 . The system can be sold today for $194,000. It is being depreciated using MACRS and a​ 5-year recovery period​ (see the table LOADING...​). 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 $194,000. c. Calculate the initial investment associated with the replacement project.

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