8) The Shell Corp. owns a piece of petroleum drilling equipment that costs &100,000 and will be depreciated by Straight-line depreciation with B=$100,000, N=5 years, S=$0. There is a combined 40% tax rate. Shell will lease the equipment to others each year and receive $50,000 per year. At the end of 3 years, the firm will sell the equipment for $20,000. If the firm requires a 10% after-tax rate of return, what is the PW of the investment?
8) The Shell Corp. owns a piece of petroleum drilling equipment that costs &100,000 and will be depreciated by Straight-line depreciation with B=$100,000, N=5 years, S=$0. There is a combined 40% tax rate. Shell will lease the equipment to others each year and receive $50,000 per year. At the end of 3 years, the firm will sell the equipment for $20,000. If the firm requires a 10% after-tax rate of return, what is the PW of the investment?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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don't use excel also can you show me maths solving with equation by hand please....
Transcribed Image Text:8) The Shell Corp. owns a piece of petroleum drilling equipment that costs
&100,000 and will be depreciated by Straight-line depreciation with B=$100,000,
N=5 years, S=$0. There is a combined 40% tax rate. Shell will lease the equipment
to others each year and receive $50,000 per year. At the end of 3 years, the firm
will sell the equipment for $20,000. If the firm requires a 10% after-tax rate of
return, what is the PW of the investment?
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