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What will be the effective purchasing power

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Question - Thirteen years ago, the Archer Corporation borrowed $7,000,000. Since then, cumulative inflation has been 67 percent (a compound rate of approximately 4 percent per year).

Required -

a. When the firm repays the original $7,000,000 loan this year, what will be the effective purchasing power of the $7,000,000?

b. To maintain the original $7,000,000 purchasing power, how much should the lender be repaid?

Reference no: EM132616091

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