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In the next 5 years, Company ABC is required to pay the following amounts: End of year 1 2 3 4 5 Amount $4,025 $4,025
In the next 5 years, Company ABC is required to pay the following amounts:
End of year | 1 | 2 | 3 | 4 | 5 |
---|---|---|---|---|---|
Amount | $4,025 | $4,025 | $9,025 | $6,125 | $53,500 |
Company ABC has decided to match its liability obligations using the following assets:
- 3 year coupon bond with 8% annual coupon rate and 5% effective yield
- 4 year coupon bond with 5% annual coupon rate and 8% effective yield
- 5 year coupon bond with 7% annual coupon rate and 10% effective yield
Calculate the total amount invested in all three bonds.
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