| Question |
The Shell out Corp. owns a piece of petroleum drilling equipment that costs $100,000 and will be depreciated in 10 years by double declining balance , with conversion to straight-line at the optimal point. Assume no in the depreciation computation and a 34% tax rate. Shell out will lease the equipment to others and each year receive $30,000 in rent. At the end of 5 years, the firm will sell the equipment for $35,000. (Note that this is different from the zero-salvage-value assumption used in computing the .) What the after-tax rate of return Shell is out will receive from this equipment investment? |
