Farrah Fowler Financial pays lifetime annuities to it's pension recipients. Assuming Farrah Fowler stays in...
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Farrah Fowler Financial pays lifetime annuities to it's pension recipients. Assuming Farrah Fowler stays in business indefinitely, the pension obligations resemble a perpetuity. Assume Farrah Fowler Financial has the obligation to make perpetual payments of $3.2 million per year to pension beneficiaries. The yield to maturity on all bonds is 16.5%. What is the present value of Farrah Fowler's obligation to its pension fund receipents? (Enter your answer in millions rounded to 2 decimal places. Proant value of obligation million If the duration of 5-year maturity bonds with coupon rates of 14.2% (paid annually) is four years and the duration of 20-year maturity bonds with coupon rates of 7% (poid annually) is 11 years, how much of each of these coupon bonds in market value) Will Farrah. Fowler want to hold to both fully fund and immunize pension obligations? (Do not round intermediate calculations. Enter your answers in millions rounded to 1 decimal place.) 5-year bond 20 year bond million million What will be the par value of Farrah-Fowler's holdings in the 20-year coupon bond? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) Par value million
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