McGwire Company's pension fund projects that most of its employees will take advantage of an early retirement program the company plans to offer in 5 years.Anticipating the need to fund these pensions,the firm bought zero coupon U.S.Treasury Trust Certificates maturing in 5 years.When these instruments were originally issued,they were 12% coupon,30-year U.S.Treasury bonds.The stripped Treasuries are currently priced to yield 10%.Their total maturity value is $6,000,000.What is their total cost (price)to McGwire today?
A)$3,366,714
B)$3,453,040
C)$3,541,580
D)$3,632,390
E)$3,725,528

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The Answer of McGwire Company's pension fund projects that most of its employees will take advantage of an early retirement program the company plans to offer in 5 years.Anticipating the need to fund these pensions,the firm bought zero coupon U.S.Treasury Trust Certificates maturing in 5 years.When these instruments were originally issued,they were 12% coupon,30-year U.S.Treasury bonds.The stripped Treasuries are currently priced to yield 10%.Their total maturity value is $6,000,000.What is their total cost (price)to McGwire today?
A)$3,366,714
B)$3,453,040
C)$3,541,580
D)$3,632,390
E)$3,725,528

McGwire Company's Pension Fund Projects That Most of Its Employees