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Bcs maintains the a rating for the bond issue

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BCS Industries is contemplating issuing a 30 year bond with a coupon rate of 7% (annual coupon payments) and a face value of $1000 per bond. BCS believes it can get a rating of 'A' from Standard & Poor's. However, due to recent financial difficulties at the company, Standard & Poor's is warning that it may downgrade BCS bonds to BBB. Yield on A-rated long term bonds are currently 6.5% and yields on BBB-rated bonds are 6.9%. What is the price of the bond if BCS maintains the A rating for the bond issue? What will be the price of the bond if BCS bond is downgraded to BBB? Show your work below using Excel prompt or your financial calculator.

Reference no: EM132577482

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