Are Negotiating to Make a 7-Year Loan of $25,000 to Breck

question 81

Multiple Choice

are negotiating to make a 7-year loan of $25,000 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)$4,271.67
• B)$4,496.49
• C)$4,733.15
• D)$4,969.81
• E)$5,218.30

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Definitions:

Photoreceptors

Specialized cells found in the retina of the eye that are sensitive to light, converting light signals into neural signals for visual recognition.

Nociceptors

Pain receptors that are sensory neurons found throughout the body, responsible for detecting harmful stimuli and sending pain signals to the brain.

Referred Pain

A pain perceived at a location other than the site of the painful stimulus.

Proprioception

The sense of the relative position of one's own body parts and strength of effort being employed in movement, often referred to as the "sixth sense."