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Hoxworth wants to develop a plan for making the annual payments by investing in the following securities (par value = $1000). Funds not invested in

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Hoxworth wants to develop a plan for making the annual payments by investing in the following securities (par value = $1000). Funds not invested in these securities will be placed in savings. Security Current Price Rate(%) Years to Maturity 1 3 $1055 6.750 2 $1000 5.125 4 Assume that interest is paid annually. The plan will be submitted to the judge and, if approved, Hoxworth will be required to pay a trustee the amount that will be required to fund the plan. The goal is to find the minimum cash settlement necessary to fund the annual payments. e. What is the minimum cash settlement amount? f. How many units of 3 year bonds are purchased? 8. How much is saved in year 4? h. Using the sensitivity report, what is the interpretation of the reduced cost number for year 4 saving? i. Using the sensitivity report, what is the interpretation of the shadow price if the beginning of year 6 payment is only 4597 Hoxworth wants to develop a plan for making the annual payments by investing in the following securities (par value = $1000). Funds not invested in these securities will be placed in savings. Security Current Price Rate(%) Years to Maturity 1 3 $1055 6.750 2 $1000 5.125 4 Assume that interest is paid annually. The plan will be submitted to the judge and, if approved, Hoxworth will be required to pay a trustee the amount that will be required to fund the plan. The goal is to find the minimum cash settlement necessary to fund the annual payments. e. What is the minimum cash settlement amount? f. How many units of 3 year bonds are purchased? 8. How much is saved in year 4? h. Using the sensitivity report, what is the interpretation of the reduced cost number for year 4 saving? i. Using the sensitivity report, what is the interpretation of the shadow price if the beginning of year 6 payment is only 4597

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