$2.$An asset was acquired by Hugo and Sons with the following values: First cost$=$

$$400,000,$ depreciable life$=3$ years, and an estimated salvage value of $$80,000.$ Initial investment is borrowed at $10\%$ per year with repayment of an equal uniform amounts at the end of each year in $2$ years. Expected gross income and expenses are $$200,000$ and $$40,000$ at year $1,$ respectively and both increase by $$10,000$ per year subsequently. The asset is actually salvaged after $3$ years for $$500,000.$