Depreciation and Rate of Return

Burrell Company purchased a machine for $44,000 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 $22,000 each year. The tax rate is 25%.

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 answers to two decimal places.

2016 25 %

2017 32.14 %

2018 45 %

2019 75 %

2020 225 %

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

2016 9.38 %

2017 40.63 %

2018 92.71 %

2019 179.51 %

2020 ????