Multiple Choice
You are negotiating to make a 7-year loan of $20,000 to Breck Inc.To repay you,Breck will pay $2,500 at the end of Year 1,$5,000 at the end of Year 2,and $7,500 at the end of Year 3,plus a fixed but currently unspecified cash flow,X,at the end of each year from Year 4 through Year 7.Breck is essentially riskless,so you are confident the payments will be made.You regard 8% as an appropriate rate of return on a low risk but illiquid 7-year loan.What cash flow must the investment provide at the end of each of the final 4 years,that is,what is X?
A) $2,831.49
B) $3,369.47
C) $2,520.02
D) $2,661.60
E) $2,491.71
Correct Answer:

Verified
Correct Answer:
Verified
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