Question: Transit Corporation has just issued a CMO. The CMO has two tranches - Tranche A has a principal value of $ 7 2 million and

Transit Corporation has just issued a CMO. The CMO has two tranches - Tranche A has a principal value of
$72 million and Tranche B has a principal value of $47 million. Each of these tranches has 2.9% annual
coupon rate. If at the end of the first year, the corporation receives total cash flows of $18.1 million, how
much will be paid to Tranche A investors (in million dollars)?
(Please only provide your answer to two decimal places in terms of millions of dollars - please do not show the $ sign in the
answer. e.g. if the answer is $2.13 million, enter 2.13)
Answer:
 Transit Corporation has just issued a CMO. The CMO has two

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