1 Problem 1 - 2.5 pts 1. Suppose that the following zero-coupon bonds are traded: (1) = 0.85, (2) = 0.83, and (3) = 0.78. Suppose that Myers Trucking is considering entering into a 3 year contract with the Baker corporation. The contract calls for Myers to pay Baker $800,000 now in return for Baker's mainte- nance service on Myers' truck fleet for three years. Myers has calculated that the cost of maintenance will be $300,000 at the end of year one, $360,000 at the end of year two, and $395,000 at the end of year three. Should Myers enter into this contract? What is the maximum amount Myers should be willing to pay for such a contract? 2. Calculate ii, i2 and is, the first three components of the term structure vector. (Hint: (t) = (Itio,t). 1 Problem 1 - 2.5 pts 1. Suppose that the following zero-coupon bonds are traded: (1) = 0.85, (2) = 0.83, and (3) = 0.78. Suppose that Myers Trucking is considering entering into a 3 year contract with the Baker corporation. The contract calls for Myers to pay Baker $800,000 now in return for Baker's mainte- nance service on Myers' truck fleet for three years. Myers has calculated that the cost of maintenance will be $300,000 at the end of year one, $360,000 at the end of year two, and $395,000 at the end of year three. Should Myers enter into this contract? What is the maximum amount Myers should be willing to pay for such a contract? 2. Calculate ii, i2 and is, the first three components of the term structure vector. (Hint: (t) = (Itio,t)