Walt is evaluating an investment that will provide the following returns at the end of each of the following years:
year 1, $12,500;
year 2, $10,000;
year 3, $7,500;
year 4, $5,000;
year 5, $2,500;
year 6, $0;
year 7, $12,500.
Walt believes that he should earn 12 percent compounded annually on this investment.
How much should he pay for this investment?
