An investor with a 8-year investment horizon is considering purchasing a 10-year 8% coupon corporate bond with annual payments that is currently trading at $87.71. The investor expects that she can reinvest the coupon payments at an annual interest rate of 6% and that at the end of the investment horizon the 2-year bond will be selling to offer a yield to maturity of 5%. The goal is to estimate the total return on this bond.

Calculate the selling price at the end of year 8.

Calculate the re-investment income (interest on interest plus coupons) at the end of year 8 for reinvesting all the coupons received.