5. We are considering investing in one of the following two bonds. The one is a 2 year, 7% versus one, which is 25 year, 3% bond. Which shall we choose, if we predict that market rates will rise from 10% to 12 % in the future one year? Compute the exact amount more we shall make by investing in the right one.

6. We have the following information. The debt to assets, average collection period, ITO, net profit margin and return on equity are .70, 60 days, 2 times, 9% and 18% respectively for a company, while they are .45, 30 days, 6 times, 5% and 11% for the industry. Evaluate the companys prospects.

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