37.

You are negotiating to make a 7-year loan of $25,000 to Breck Inc. To repay you, Breck will pay $3,500 at the end of Year 1, $7,000 at the end of Year 2, and $10,500 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. $2,241.05

b. $9,508.33

c. $3,840.77

d. $2,823.08

e. $2,613.96