1. The building that houses Platos Closet in Jonesboro is for sale. If you purchase this property, you can expect to receive an annual cash flow of $151,000 throughout the future (in perpetuity). What is the present value of the expected cash flows if your required return is 7.25%?

2. You have decided to start your own bakery. Starting up the new business will require funding for store fixtures, ovens, mixers, refrigerators, and supplies. You have some money to invest in the business, but you dont have enough to fund everything. So, you have decided to go to the bank to ask for a loan. After looking at your revenue and expense projections, you have determined that you can make monthly loan payments of $1,250 on a ten-year loan. The interest rate on commercial loans is 7.2%. How much will the bank be willing to lend?