Depreciation and Rate of Return

Burrell Company purchased a machine for $19000 on January 2, 2016. The machine has an estimated service life of 5 years and a zero estimated residual value. The asset earns income before depreciation and income taxes of $9500 each year. The tax rate is 35%.

Required:

Compute the rate of return earned (on the average net asset value) by the company each year of the asset's life under the straight-line and the double-declining-balance depreciation methods. Assume that the machine is the company's only asset.

Straight-line method. Do not round intermediate calculations. Round final answer to two decimal places.

2016: ____%

2017: ____%

2018: ____%

2019: ____%

2020: ____%

Double-declining-balance depreciation method. Do not round intermediate calculations. Round final answer to two decimal places.

2016: ____%

2017: ____%

2018: ____%

2019: ____%

2020: ____%

***Please show all work and calculations****