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How much will the firm owe

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1. Hopkins Books Inc. wishes to borrow $75,000 today for the purchase of publishing materials. They have an agreement with their commercial banker that they can borrow money at an annual rate of 5.5%. How much will the firm owe if they repay the loan in exactly 1 year?

2. Which choice has a greater present value if we assume a required rate of return of 11%?

(1) A lump-sum cash flow today of $248.69.

(2) $100 cash flows occurring 1, 2, and 3 years from today.

(3) A single cash flow of $331 3 years from today.

Reference no: EM131960072

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