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3.You 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,

3.You 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?

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