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Andrew Industries is contemplating issuing a 30-year bond with a coupon rate of 7.06% (annual coupon payments) and a face value of $1,000. Andrew 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 Andrew Industries' bonds to BBB. Yields on A-rated, long-term bonds are currently 6.48%, and yields on BBB-rated bonds are 6.85%. a. What is the price of the bond if Andrew Industries maintains the A rating for the bond issue? b. What will be the price of the bond if it is downgraded? a. What is the price of the bond if Andrew Industries maintains the A rating for the bond issue? i Andrew maintains the A rating for the bond issue, the price of the bond is $1075,90). (Round to the nearest cent) b. What will be the price of the bond if it is downgraded? if it is downgraded, the new bond's price will be $1026.46 (Round to the nearest cont.) Consider a retail firm with a net profit margin of 3.33%, a total asset turnover of 1.86, total assets of $43,4 million, and a book value of equity of $17.5 million a. What is the firm's current ROE? b. If the firm increased its net profit margin to 4.26%, what would be its ROE? c. If, in addition, the firm increased its revenues by 20% (maintaining this higher profit margin and without changing its assets or liabilities), what would be its ROE? a. What is the firm's current ROE? The firm's curront ROE IS % (Round to one decimal place) b. If the firm increased its net profit margin to 4 26%, what would be its ROE? The new ROE would be % (Round to one decimal place.) c., in addition, the firm increased its revenues by 20% (maintaining this higher profit margin and without changing its assets or liabilities), what would be its ROE? The new ROE would be % (Round to one decimal place.)

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