1. Sales tax for infrastructure improvements. A new 350,000 s.f. shopping center is being built in a city that has a local sales tax rate of 8.75% of which 1.5% goes to the city. Analyses indicate that the average annual taxable sales per gross s.f. will be $250. The city promises that 50% of its share of the sales tax from the project can be used for road improvements in the area around the shopping center, calling this arrangement a sales tax set aside. The city wants to borrow money to build the road improvements and can borrow at 5% per year over 20 years, payable monthly, using the projected cash flow from the sales tax arrangement to pay back the loan. For simplicity sake, lets assume that the entire sales tax set aside can be used for debt service and that the amount of sales tax does not increase or decline over the term of the loan. Estimate the principal that the projected cash flow could support.