What is the after-tax rate of return shellout

Assignment Help Business Economics
Reference no: EM131810284

The Shellout Corp. owns a piece of petroleum drilling equipment that costs $100,000 and will be depreciated in 10 years by double declining balance depreciation, with conversion to straight-line depreciation at the optimal point. Assume no salvage value in the depreciation computation and a combined 34% tax rate. Shellout 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-salvagevalue assumption used in computing the depreciation.) What is the after-tax rate of return Shellout will receive from this equipment investment?

Reference no: EM131810284

Questions Cloud

Piece of land at the intersection of two busy streets : 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
What is the prospective rate of return : (a) What is the prospective rate of return before income taxes?
Prepare a contribution format income statement for game : Magic Realm, Inc., has developed a new fantasy board game. Prepare a contribution format income statement for the game last year
What was arlingtons 2016 free cash flow : Arlington Corporation's financial statements (dollars and shares are in millions) are provided here.
What is the after-tax rate of return shellout : What is the after-tax rate of return Shellout will receive from this equipment investment?
Probability that people picked at random from a group : Suppose 1% of people in a large population are over 6 feet 3 inches tall. Approximately what is the chance that from a group of 200 people picked at random.
Prepare the necessary general journal entry for june : Prepare the necessary general journal entry for June 17, Received the goods from Shelby. Prepare the necessary general journal entry for June 25.
Production machinery and depreciated : A mining corporation purchased $120,000 of production machinery and depreciated it using SOYD depreciation, a 5-year depreciable life, and zero salvage value.
Compute the after-tax rate of return : Compute the after-tax rate of return for this investment situation, assuming a 46% incremental tax rate.

Reviews

Write a Review

Business Economics Questions & Answers

  Advanced analysis-consumption schedule

(Advanced Analysis) Assume that the consumption schedule for a private open economy is such that consumption is as follows: C = 80 + 0.9 Y Assume further that planned investment Ig and net exports Xn are independent of the level of real GDP and const..

  Producer of synthetic motor oil for automobiles

A producer of synthetic motor oil for automobiles and light trucks has made the following statement: "One quart of Dynolube added to your next oil change will increase fuel mileage by two percent. Assume the company's claim is correct. How much money..

  Affect income differently than an increase in government

A personal tax cut of $50 billion will affect income differently than an increase in government spending by $50 billion because:

  Several units of homogeneous product as single package

A monopoly is considering selling several units of homogeneous product as a single package. A typical consumer's demand for the product is Qd = 50-.25P, and the marginal cost of production is $120. -Determine the optimal number of units to put in a p..

  What will be the amount of interest accumulated at the time

Emily Dorsey's current salary is $85,000 per year, and she is planning to retire 19 years from now. She anticipates that her annual salary will increase by $1,000 each year ($85,000 the first year, to $86,000 the second year, $87,000 the third year, ..

  Discuss the theories of capital structure in brief

Distinguish between Over and Under Capitalization and Explain the meaning and causes of under capitalization? Discuss its Effects

  Marginal cost-marginal revenue and average total cost

Find the equations for: Marginal Cost, Marginal Revenue, Average Total Cost. Now carefully graph them, along with the demand curve on the same graph. What is the optimal price and quantity if the firm can only set one price for all units?

  Use the markdown pricing decisions spreadsheet model

Use the markdown pricing decisions spreadsheet model and a two-way data table to find the total revenue if days at full retail vary from 20 to 40 in increments of 5 and the intermediate markdown varies from 15% to 50% in increments of 5%. In Excel sp..

  The law of comparative advantage recommends that countries

The law of comparative advantage recommends that countries specialize in those products in which they have a comparative advantage, not an absolute advantage.

  What are the major categories of commercial damages

As the textbook authors point out, calculating commercial damages takes creative analysis as well as a step-by-step scientific approach. Each situation will be different. What are the major categories of commercial damages?

  Compute the supply surplus

Assume a good where its equilibrium price is 40 and its equilibrium quantity is 3.0 units. Compute the supply surplus when price is 60. Take into consideration that the elasticity of supply is 1 and the elasticity of demand (-1).

  Consider monopolist facing two customer groups

Consider a monopolist facing two customer groups. The first has demand p1 = 10 - q/2 and the second has demand p2 = 20 - q. The firm has marginal cost MC(q) = q, where q = q1 + q2 is the total amount sold. Suppose a regulator could set one per unit p..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd