Twenty years ago, the Archer Corporation borrowed $7, 550,000. Since then, cumulative inflation has been 81 percent (a compound rate of approximately 3 percent per year).
a. When the firm repays the original $7, 550,000 loan this year, what will be the effective purchasing power of the $7, 550,000? Effective purchasing power
b. To maintain the original $7, 550,000 purchasing power, how much should the lender be repaid? Loan repayment