Problem
Xon, a small oil company, purchased a new petroleum drilling rig for $1,800,000. Xon will depreciate the drilling rig using MACRS depreciation. The drilling rig has been leased to a drilling company, which will pay Xon $450,000 per year for 8 years. At the end of 8 years the drilling rig will belong to the drilling company. If Xon has a 34% combined incremental tax rate and a 10% after-tax MARR, does the investment appear to be satisfactory?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.