An investor bought a racehorse for $1 million. The horse's average winnings were $700,000 per year and expenses averaged $200,000 per year. The horse was retired after 3 years, at which time it was sold to a breeder for S 175,000 per year. Assuming MACRS depreciation, a class life of 3 years, and an income tax rate of 28%, determine the investor's after-tax rate of return on this investment. Use an EXCEL block function to calculate your answer. Enter your answer as a percentage rounded to 2 decimal places in this format. Please show using excel features
An investor bought a racehorse for $1 million. The horse's average winnings were $700,000 per year and expenses averaged $200,000 per year. The horse was retired after 3 years, at which time it was sold to a breeder for S 175,000 per year. Assuming MACRS depreciation, a class life of 3 years, and an income tax rate of 28%, determine the investor's after-tax rate of return on this investment. Use an EXCEL block function to calculate your answer. Enter your answer as a percentage rounded to 2 decimal places in this format. Please show using excel features
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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Transcribed Image Text:An investor bought a racehorse for $1 million. The horse's average winnings
were $700,000 per year and expenses averaged $200,000 per year. The
horse was retired after 3 years, at which time it was sold to a breeder for S
175,000 per year. Assuming MACRS depreciation, a class life of 3 years, and
an income tax rate of 28%, determine the investor's after-tax rate of
return on this investment. Use an EXCEL block function to calculate your
answer. Enter your answer as a percentage rounded to 2 decimal places in
this format. Please show using excel features
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