Cash flow must the investment

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CF required to provide a given rate of return

You have been offered a 5-year investment at a price of $40,000. It will pay $3,250 at the end of Year 1, $4,500 at the end of Year 2, and a fixed but currently unspecified cash flow, X, at the end of Years 3 through 5. The payer is essentially riskless, so you are sure the payments will be made, and you regard 5% as an appropriate rate of return on riskless 5-year investments. What cash flow must the investment provide at the end of each of the final 3 years, that is, what is X?

a. $ 7,875.22

b. $10,111.50

c. $13,288.36

d. $15,250.00

e. $18,666.33

Reference no: EM132000335

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