You are in negotiations to make a 7 - year loan of $31, 000 to DeVille Corporation. To repay you, DeVille 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. You are confident the payments will be made, since DeVille is essentially riskless. 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? Select the correct answer. a. $7,037.75 b. $7, 049.05 с. $7, 003.85 d. $ 7,015.15 e. $7,026.45

You are in negotiations to make a 7 - year loan of $31, 000 to DeVille Corporation. To repay you, DeVille 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. You are confident the payments will be made, since DeVille is essentially riskless. 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? Select the correct answer. a. $7,037.75 b. $7, 049.05 с. $7, 003.85 d. $ 7,015.15 e. $7,026.45

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 19P

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