A small vessel was purchased by a chemical company for $550,000 and is to be depreciated...

A small vessel was purchased by a chemical company for $550,000 and is to be depreciated by MACRS depreciation. When its requirements changed suddenly, the chemical company leased the vessel to an oil company for 6 years at $100,000 per year. The lease also provided that the vessel could be purchased at the end of 6 years by the oil company for $350,000. At the end of the 6 years, the oil company exercised its option and bought the vessel. The chemical company has a 34% incremental tax rate. Compute its after-tax rate of return on the vessel.

Also

Explain what is the 34% incremental tax rate?
What class property MACRS this is?

Expert Solution

ekkarill92 answered 2 years ago

An equipment was purchased by a Company at the cost of $875,000. It was depreciated for...

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