The price of the pybus bonds

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Reference no: EM132015603

Pybus, Inc. is considering issuing bonds that will mature in 25 years with an annual coupon rate of 8 percent. Their par value will be $1,000?, and the interest will be paid semiannually. Pybus is hoping to get a AA rating on its bonds and, if it does, the yield to maturity on similar AA bonds is 8.5 percent. 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 9.5 percent. What will be the price of these bonds if they receive either an A or a AA rating?

a. The price of the Pybus bonds if they receive a AA rating will be $__. (Round to the nearest cent.)

b. The price of the Pybus bonds if they receive a A rating will be $__. (Round to the nearest cent.)

Reference no: EM132015603

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