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A company must pay liabilities of $3,000 in 1 year and $5,000 in 3 years. Available are - Bond A: 1-year with annual effective yield

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A company must pay liabilities of $3,000 in 1 year and $5,000 in 3 years. Available are - Bond A: 1-year with annual effective yield of 4% - Bond B: 2-year with annual effective yield of 5% The 1-year forward rate starting in 2 years is 5.5%. Calculate the cost to create an investment portfolio that matches liabilities exactly. (A) 7183 (B) 7225 (C) 7420 (D) 7450 (E) 7463

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