1) You will require $200,000 for the outflow in eight years. There is flat yield curve and prevailing interest rate is= 7%,. You have 2 plausible bonds that both mature in eight years. Each has face value of $1,000. Bond 1 pays annual coupons of 6.2%. Bond 2 pays annual coupons of 8.7%. Rates will remain at 7%. Determine the FV you will have in eight years for investing in both bonds. How many of each bond kind will you need to purchase to have= $200,000 with these terminal values. Rate falls to= 5% (flat yield again) right after you buy. What will now be terminal amount you require to accrue on each investment in eight years (you bought the number of bonds that was find outd above)?
2) On particular date, FedEx has stock price of= $88.66 and an EPS of= $6.34. Its competitor, UPS, had the EPS of $0.40. What would be expected price of UPS stock on this date, if approximate by using method of comparables?