Issuing bonds that will mature

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Pybus, Inc is considering issuing bonds that will mature in 20 years with an annual coupon rate of 7%. Their PAR Value will be $1,000 and the interest will be paid semi-annually. Pybus is hoping to get an AA rating on it bonds and, if it does, the yield to maturity on similar AA bonds is 8%. However, Pybus is not sure whether the new bonds will receive a AA rating. If they receive an A rating, the yield to maturity on similar A bonds is 9%. What will be the price of these bonds if they receive either an A or AA rating?

Reference no: EM131688039

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