A group of businessmen formed a corporation to lease for 5 years a piece of land at

Question:

A group of businessmen formed a corporation to lease for 5 years a piece of land at the intersection of two busy streets. The corporation has invested $50,000 in car-washing equipment. They will depreciate the equipment by sum-of-years'-digits depreciation, assuming a $5000 salvage value at the end of the 5 year useful life. The corporation is expected to have a before-tax cash flow, after meeting all expenses of operation (except depreciation), of $20,000 the first year, declining $3000 per year in future years (second year = $17,000, third year = $14,000, etc.). The corporation has other income, so it is taxed at a combined corporate tax rate of 20%. If the projected income is correct, and the equipment can be sold for $50oo.at the end of 5 years, what after-tax rate of return would the corporation receive from this venture?

Depreciation
Depreciation is an important concept in accounting. By definition, depreciation is the wear and tear in the value of a noncurrent asset over its useful life. In simple words, depreciation is the cost of operating a noncurrent asset producing... Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...