![4] ROK decided to replace an existing asset with a newer model. Two years ago, the existing asset originally cost $30,000 and](http://img.homeworklib.com/images/2b44dc1c-139c-4f05-9806-017cd6363479.png?x-oss-process=image/resize,w_560)
Homework Answers
Original cost 30000
Depreciation 2 yrs 20%, 32%
Depreciation value 15600
1) Book value after 2 yrs 14400
2) Sale price 25000
Capital gains 10600
Tax liability @ 40% 4240
3) Net proceeds 20760
4) NINV
Cost of asset 75000
Add: shipping & installation 5000
Less: sale proceeds post tax 20760
Add: increase in working capital 1000 (Current Assets - Current Liabilities)
NINV 60240
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