Question

Question 12

Answer 1

The required x = $2,831.49. Option B) is correct.

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.

What is invesment?

When some apply there money on something so that he can get higher value in returns of his money.

for the final 4 years

20000=2500/1.08+5000/(1.08^2)+7500/(1.08^3)+x/(1.08^4)+x/(1.08^5)+x/(1.08^6)+x/(1.08^7)

x = $2,831.49

Thus the required value of x = $2,831.49.

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