The Ogi Corporation, a construction company, purchased a pickup truck for $14,000 and used MACRS depreciation in

Question:

The Ogi Corporation, a construction company, purchased a pickup truck for $14,000 and used MACRS depreciation in the income tax return. During the time the company had the truck, they estimated that it saved $5000 a year. At the end of 4 years, Ogi sold the truck for $3000. The combined federal and state income tax rate for Ogi is 45%. Compute the after-tax rate of return for the truck.

Depreciation
Depreciation is an important concept in accounting. By definition, depreciation is the wear and tear in the value of a noncurrent asset over its useful life. In simple words, depreciation is the cost of operating a noncurrent asset producing...