Part A: Xon, a small oil equipment company, purchased a new petroleum drilling rig for $2M. Xon will depreciate it using

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Part A:
Xon, a small oil equipment company, purchased a new petroleum
drilling rig for $2M. 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.
If Xon has a 28% combined incremental tax rate and a 20%
after-tax MARR, what is the IRR of the before tax cash flow?
Part A Answer Options (please make sure your answer is one of
the following)
a. 29.58%
b. 34.73%
c. 33.86%
d. 27.17%
Part B:
Xon, a small oil equipment company, purchased a new petroleum
drilling rig for $2M. 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.
If Xon has a 28% combined incremental tax rate and a 20%
after-tax MARR, what is the IRR of the after tax cash flow?
Please choose one of the following:
a. 34.73%
b. 29.58%
c. 33.86%
d. 27.17%
Part C:
Xon, a small oil equipment company, purchased a new petroleum
drilling rig for $2M. 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.
If Xon has a 28% combined incremental tax rate and a 20%
after-tax MARR, what is the Book Value of the equipment at the end
of year 3?
Please choose one of the following:
a. 345,000
b. 230,400
c. 576,000
d. 960,000