$12-31$

Xon, a small oil equipment company, purchased a new petroleum drilling rig for $$2,000,000.$ Xon will depreciate it using MACRS depreciation. The drilling rig has been leased to a firm, which will pay Xon $$750,000$ per year for $8$ years. After $8$ years the drilling rig will belong to the firm. Xon has a $28\%$ combined incremental tax rate and a $20\%$ after$-$tax MARR

$($a$)$Does the investment appear to be satisfactory?

$($b$)$Some claim that the coal and$/$or oil industries are inherently unsustainable and harmful to the environment. Develop a short position summary to support and challenge this perspective.