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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:

  1. 3 year coupon bond with 8% annual coupon rate and 5% effective yield
  2. 4 year coupon bond with 5% annual coupon rate and 8% effective yield
  3. 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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