What cash flow must the investment provide


Problem:

You are negotiating to make a 7-year loan of $25000 to Berk Inc. To repay you, Berk will pay $2500 at the end of Year 1, $5000 at the end of Year 2, and $7500 at the end of Year 3, plus a fixed but currently unspecified cash flow, X, at the end of Year 4 through 7. Beck is essentially riskless, so you are confident the payments will be made, and you regard 8% as an appropriate rate of return on low risk 7-year loans. 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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Finance Basics: What cash flow must the investment provide
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