• PV’s perpetual obligation =

• PV’s perpetual obligation = (RM 2 million/0.16) = RM 12.5 million.
• Based on the duration of a perpetuity, the duration of this obligation = (1.16/0.16) = 7.25 years

Denote by the the weight on the 5-year maturity bond, which has duration of 4 years. Then

x 4 + (1 – ) x 11 = 7.25, which implies that = 0.5357. Therefore,
0.5357 x RM 12.5 = RM 6.7 million in the 5-year bond and
0.4643 x RM 12.5 = RM 5.8 million in the 20-year bond.

The total invested amounts to RM (6.7 + 5.8) million = RM 12.5 million, fully match the funding needs.