Problem:
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 three years, at which time it was sold to a breeder for $175,000. Assume accelerated 50% straight line CCA (25%---50%----25%) and an income tax rate of 36%.
Requirement:
Question: Determine the investor's after-tax rate of return.
Note: Please provide through step by step calculations.