Your firm has an obligation to pay a parts supplier seven equal annual payments of $5,000,000...

Your firm has an obligation to pay a parts supplier seven equal annual payments of $5,000,000 (the first payment is due 1 year from today). Assume the Treasury yield curve is a flat 4.00%, and today your firm purchases zero-coupon Treasury bonds to fund and immunize the obligation. All bonds that your firm purchases have the same maturity. Rounded to the nearest dollar, what is the total face value of the bonds your firm buys? Hint: remember you the first steps will be to calculate the duration (carry out to at least 6 decimal places) and present value of the obligation. Express your final answer for the face value rounded to the nearest whole dollar (i.e., integer)

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jeff jeffy answered 1 year ago

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