Please answer fast 5. Xon, a small oil equipment company, purchased a new petroleum drilling rig for S2,000,000. Xon willdepreciate it using MACRS depreciation. The drilling rig has been leased to a firm, which will pay Xon$750,000 per year for 8 years. After 8 years the drilling rig will belong to the firm. The firm has a 24%combined marginal income tax rate. What is the after-tax rate of return?

Given information: Cost of petroleum rig : $2,000,000 Cash flows received over 8 years :$750,000…

Xon, a small oil equipment company, purchased a new petroleum drilling rig for S2,000,000. Xon will depreciate it using MACRS depreciation. The drilling rig has been leased to a fim, which will pay Xon $750,000 per year for 8 years. After 8 years the drilling rig will belong to the fim. The firm has a 24% combined marginal income tax rate. What is the after-tax rate of retum?

Xon, a small oil equipment company, purchased a new petroleum drilling rig for S2,000,000. Xon will depreciate it using MACRS depreciation. The drilling rig has been leased to a fim, which will pay Xon $750,000 per year for 8 years. After 8 years the drilling rig will belong to the fim. The firm has a 24% combined marginal income tax rate. What is the after-tax rate of retum?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 9P

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