Question 23 (10 marks) Mr and Mrs Naidu have an investment property that they bought on 19 Jan, 2017 for $450,000, inclusive of freehold land valued at $100000. They have a home loan mortgage of $290,000 with ANZ. The interest rate for the home loan mortgage is 5.2%. They also have $150,000 in their savings account, currently earning them 0.25% interest at ANZ. Mrs Naidu has been requesting Mr Naidu to pay the $150,000 into the home loan account and bring the home loan account down by $150,000. Mr Naidu is very reluctant to do this and indicates he likes to see money in his savings account The investment property is earning a profit before tax of $12,000. The depreciation rate is 2.5% straight line and the property has an expected life of 30 years with a $650000 residual value. The tax rate is 20% on profit and 10% on capital gains. With the current COVID 19 pandemic and high level of uncertainty, inflation expected to increase Globally by 6% and the Fiji dollar expected to weaken against its trading partners, Mrs Naidu hears about you doing AF208 and comes to you for some advice. (10 marks) Required a. Advice Mrs Naidu if she her plans to pay down the home loan is appropriate. Please indicate the factors that need to considered in evaluating such a decision. Clearly state your assumptions. (10 marks)