1. An oil company is buying some petroleum drilling equipment (MACRS 5-year property class) for $200,000. The tools are being depreciated by MACRS. It is expected the tools will actually be kept in service for 6 years and then sold for $2,000. The before-tax benefit of owning the tools is as follows:

Year	Before Tax Cash Flow
1	$ 30,000
2	$ 64,000
3	$ 100,000
4	$ 90,000
5	$ 65,000
6	$ 60,000
6	$2,000 selling price

Compute the after-tax rate of return for this investment situation, assuming a 45% incremental tax rate.

Can you please show me step by step process to find answer? Thanks!