McGwire Company's Pension Fund Projects That Most of Its Employees

Multiple Choice

McGwire Company's pension fund projects that most of its employees will take advantage of an early retirement program the company plans to offer in 5 years.Anticipating the need to fund these pensions,the firm bought zero coupon U.S.Treasury Trust Certificates maturing in 5 years.When these instruments were originally issued,they were 12% coupon,30-year U.S.Treasury bonds.The stripped Treasuries are currently priced to yield 10%.Their total maturity value is $6,000,000.What is their total cost (price) to McGwire today?

A) $3,366,714
B) $3,453,040
C) $3,541,580
D) $3,632,390
E) $3,725,528