You are negotiating to make a 7-year loan of $35,000 to Breck Inc. To repay you, Breck will pay $3,300 at the end of Year 1, $6,600 at the end of Year 2, and $9,900 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. $9,534.89 O b. $5,563.52 c. $6,489.28 d. $13,311.66 e. $7,008,43

You are negotiating to make a 7-year loan of $35,000 to Breck Inc. To repay you, Breck will pay $3,300 at the end of Year 1, $6,600 at the end of Year 2, and $9,900 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. $9,534.89 O b. $5,563.52 c. $6,489.28 d. $13,311.66 e. $7,008,43

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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