Esther needs to pay rent in 5 payments of $2,000. Payments are made annually with the...

Transcribed Image Text:

Esther needs to pay rent in 5 payments of $2,000. Payments are made annually with the first payment beginning 1/1/2014. She plans to purchase two zero-coupon bonds to cover her costs. The first bond expires in 1/1/2015 while the second expires in 1/1/2019. The annual effective interest rate is 8%. Based on Redington immunization, caleulate the total face amount for the bonds so that Esther is immunized from small changes in interest rates. 10,025 10,030 10,035 10,040 10,045 Esther needs to pay rent in 5 payments of $2,000. Payments are made annually with the first payment beginning 1/1/2014. She plans to purchase two zero-coupon bonds to cover her costs. The first bond expires in 1/1/2015 while the second expires in 1/1/2019. The annual effective interest rate is 8%. Based on Redington immunization, caleulate the total face amount for the bonds so that Esther is immunized from small changes in interest rates. 10,025 10,030 10,035 10,040 10,045