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 5.00%. Their total maturity value is $6,000,000. What is their total cost (price) to McGwire today? Do not round your intermediate calculations.
A. $4,795,180
B. $4,137,018
C. $5,594,377
D. $5,641,388
E. $4,701,157
Answer: E
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