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  3. pybus, inc. is considering issuing bonds that will

Pybus, Inc. is considering issuing bonds that will mature in 24 years with an annual...

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Question

Accounting

Pybus, Inc. is considering issuing bonds that will mature in

24

years with an annual coupon rate of

7

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

12

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

13

percent. What will be the price of these bonds if they receive either an A or a AA rating?

Question content area bottom

Part 1

a. The price of the Pybus bonds if they receive a AA rating will be

$enter your response here.

(Round to the nearest cent.)

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