The municipal government has imposed a temporary, five-year tax increase on the value of property that will raise $80 million at the end of the first year. Property values are estimated to grow at a rate of 3 percent per year.

a. What is the present value of the total amount of tax the proposal will raise if the discount rate is 8 percent?

b. What is the present value of the total amount of tax the municipal government could raise if the tax is permanent and the discount rate is still 8 percent?