The Following Information Is for a Collateralized Mortgage Obligation (CMO)

Multiple Choice

The following information is for a collateralized mortgage obligation (CMO) .Tranche A has a face value of $50 million and pays 6 percent annually.Tranche B has a face value of $50 million and pays 8 percent annually.All mortgages have maturities of 30 years.

If at the end of the first year,the trustee of the CMO receives total cash flows of $10 million,how are they distributed to Tranche A and B,respectively?

A) $5,558,628;$4,441,372.
B) $4,441,372;$5,558,868.
C) $4,000,000;$6,000,000.
D) $6,000,000;$4,000,000.