1.A company has an obligation of $15,670 in 8 years. The manager wants to use perpetuities (paying annual payments and market rates are 10%) and 3-year 8% annual coupon bond with a yield to maturity of 9%, to fund the obligation. How much must they invest in the coupon bonds and perpetuities to immunize the obligation?

2.Suppose instead of the 8% coupon bonds, you used 6 year zero coupon bonds. After 1 year, is the obligation still funded? Show that the value of the portfolio is equal to the value of the obligation.