Depreciation and Rate of Return

Burrell Company purchased a machine for $30,000 on January 2, 2019. 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 $15,000 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. If required, round to one decimal place.

2019
2020
2021
2022
2023

Double-declining-balance depreciation method. Round to two decimal places. Round your intermediate dollar value calculations to the nearest whole number.

2019
2020
2021
2022
2023