Let $F_1$ and $F_2$ be the weight factors in the replicating portfolio for the zero-coupon bond and the 7% coupon bond, respectively, and let $F_3$ be the price of the 5% coupon bond.

The following equations hold for time $t = 0$, $0.5 $, and `$1` $, respectively:

$`$90` \times F_1 + 110 \times F_2 = F_3 \quad \text{(i)} \ 0 \times F_1 + 3.5 \times F_2 = 2.5 \quad \text{(ii)} \ 100 \times F_1 + 103.5 \times F_2 = 102.5 \quad \text{(iii)}

Solving for $ F_2 $ from equation (ii): $`$3.5` \times F_2 = 2.5 \implies F_2 = \frac{2.5}{3.5} = \frac{5}{7} \approx 0.7143 $$ Substituting $ F_2 $ in equation (iii): $`$100` \times F_1 + 103.5 \times \frac{5}{7} = 102.5 $$ $`$100` \times F_1 + 73.9286 = 102.5 \implies 100 \times F_1 = 28.5714 \implies F_1 = 0.2857 $$ Substituting $ F_1 $ and $ F_2 $ into equation (i): $$ F_3 = 90 \times 0.2857 + 110 \times \frac{5}{7} = 25.713 + 78.571 = 104.284 $$ Therefore, the price of the 5% coupon bond should be approximately 104.29.