A company is considering the purchase of a capital asset for $$135,000.$ Installation charges needed to

make the asset serviceable will total $$25,000.$ The asset will be depreciated over six years using the

straight$-$line method and an estimated salvage value $($SV$6)$ of $$10,000.$ The asset will be kept in service

for six years, after which it will be sold for $$30,000.$ During its useful life, it is estimated that the asset

will produce annual revenues of $$40,000.$ Operating and maintenance $($O&M$)$ costs are estimated to be

$$8,000$ in every year. The effective tax rate is $40\%.$

Given that $60\%$ of the capital is equity capital, to have enough investment capital the company will

borrow $40\%$ of the total capital from a bank with an interest rate of $10\frac{\%}{?}$ year, the principal is paid in $5$

years equally starting from the end of the year $1.$ Interest is paid annually; it is calculated on the debt

amount owned at the beginning of each year.

a$)$ Prepare a table of borrowing and paying debt.

b$)$ Compute the after$-$tax cash flows.