Question
Tanya, your niece, has been offered a 5-year investment at a price of $82,010.08.It will pay $9,200 at the end of Year 1, $16,000 at
Tanya, your niece, has been offered a 5-year investment at a price of $82,010.08.It will pay $9,200 at the end of Year 1, $16,000 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 Tanya is sure the payments will be made, and she regards 5.5% 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.$24,305.00
b.$35,515.66
c.$43,282.33
d.$56,897.21
e.$69,179.80
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