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An insurance company wants to match liabilities of 5,000 payable in one year and 10,000...

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Accounting

An insurance company wants to match liabilities of 5,000 payable in one year and 10,000 payable in two years with specific assets. The following assets are currently available:
1
One-year bond with an annual coupon of 5.25% at par
Two-year bond with annual coupons of 4.50% at par
Two-year par value bond with annual coupons of 6% sold at an annual effective yield rate of 6.5%.
Calculate the smallest amount the company needs to disburse today to purchase assets that will exactly match these liabilities.
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