The Shellout Corp. owns a piece of petroleum drilling equipment that costs $300,000 and will be depreciated
Question:
The Shellout Corp. owns a piece of petroleum drilling equipment that costs $300,000 and will be depreciated over 10 years by double declining balance depreciation. There is a combined 45% tax rate. Shellout will lease the equipment to others and each year receive $165,000 in rent. At the end of 5 years, the firm will sell the equipment for $80,000. What is the after-tax rate of return Shellout will receive from this equipment investment?
Please solve this question by hand. NO Microsoft Excel functions, only a table may be used. Show correct formulas used to solve this question. Please show all work leading up to the correct answer for this question. Do not copy from another person's work!
Engineering Economic Analysis
ISBN: 9780195168075
9th Edition
Authors: Donald Newnan, Ted Eschanbach, Jerome Lavelle