Engineering economics

Problem 3-Xon, a small oil equipment company, purchased a new petroleum drilling rig for $1,800,000. Xon will depreciate it using MACRS depreciation. The drilling rig has been leased to a firm, which will pay Xon $550,000 per year for 8 years. After 8 years the drilling rig will belong to the firm. Xon has a 38% combined incremental tax rate and require a 12% after-tax MARR. Complete the table below and determine if the investment is satisfactory? BTCF MACRS Method ATCF (After TI (Taxable Year (Before Tax BV (Book Income) Value) Income TaxesTax Cash Dt Cash Flow) flow) 7 Total Depreciation Rate of Return (ROR)