Question
A company must pay liabilities of 1000 and 2000 at the end of years 1 and 2 respectively, the only investments available to the company
A company must pay liabilities of 1000 and 2000 at the end of years 1 and 2 respectively, the only investments available to the company are the following 2 zero coupon bonds:
| Maturity (years) | effective annual return | par |
| 1 | 10% | 1000 |
| 2 | 12% | 1000 |
Determine the cost to the business today to exactly match its liabilities
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
