liability. The annual effective rate of interest

b$.$ Penshing Square Associates $($PSA$)$ must pay tiabilities of $$4,000$ due $6$ months from now and

another $$104,000$ due I year from now. Lea & Perrins Investment $Co.$ is willing to sell him

the following two investments:

$($i$)$ How much of each bond should PSA purchase in order to exactly, $($absolutely$)$ match

$($replicate the cash flows of$)$ the liabilities?

$($ii$)$ What is PSA's total cost of purchasing the bonds?