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Please don't use excel, unless you have to. Please be legible. 5. Xon, a small oil equipment company, purchased a new petroleum drilling rig for

Please don't use excel, unless you have to. Please be legible.

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5. Xon, a small oil equipment company, purchased a new petroleum drilling rig for S2,000,000. Xon will depreciate it using MACRS depreciation. The drilling rig has been leased to a firm, which will pay Xon $750,000 per year for 8 years. After 8 years the drilling rig will belong to the firm. The firm has a 24% combined marginal income tax rate. What is the after-tax rate of return? (20 Points)

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