2. You have the use of a shop for the next 20 years and you will install a doughnut franchise in the shop. You expect the shop's profit will be $300,000 in its first year and will grow at 3% per year. After 20 years, the business will be closed. Compute the present value of the doughnut shop if the interest rate is 7% per year. Show your formula(s) with numbers inserted. Answer 3. Rather than buying a shop, you will consider renting a shop. Compare the purchase price, $3,500,000, to renting. The first-year rent is $140,000 per year but will rise over subsequent years. If the annual interest rate is 10%, at what is annual percentage increase in rent that makes renting equivalent to buying? Assume the shop can be used forever, and show your formula(s) with numbers inserted