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Esther needs to pay rent in 5 payments of $2,000. Payments are made annually with the first payment beginning 1/1/2014. She plans to purchase two
Esther needs to pay rent in 5 payments of $2,000. Payments are made annually with the first payment beginning 1/1/2014. She plans to purchase two zero-coupon bonds to cover her costs. The first bond expires in 1/1/2015 while the second expires in 1/1/2019. The annual effective interest rate is 8%. Based on Redington immunization, calculate the total face amount for the bonds so that Esther is immunized from small changes in interest rates. 10,025 10,030 10,035 10,040 10,045
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