4. 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. a) What will be the size of each payment for the $400,000 debt? How much of each payment is interest and how much of each payment is principal (i.e., towards the $400,000 debt)? Payment/yr Interest/yr Principal Payment/yr | Remaining principal balance b) What will be the depreciation amount and book value for this investment for years 1 through 3 using the MACRS Depreciation method? T BV c) Assuming a 40% effective tax rate and MACRS depreciation, tabulate the cash flows after tax (CFAT). Show all of your calculations in details. End of Life/disposal analysis at t= DR= CG= CL= d) What is the present worth of these cash flows given that MARR is 10%? e) Should Hugo and Sons have made this investment