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Disk Utility looks like it's pre-Yosemite [skeuomorphic dots top left] which will have no idea what APFS is. Try booting to Internet Recovery using Cmd ⌘ Opt ⌥ R & you should get the chance to install the latest OS the machine can run, rather than the one it came with. You should also get a Disk Utility that understands APFS.

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