eLab Assignment

Question $4,$ P$9-6($similar to$)$

HW Score: $8\%,4$ of $50$ points

Part $1$ of $2$

Points: $0$ of $4$

$($Related to Checkpoint $9\mathrm{.}3)($Bond valuation$)$ Pybus, Inc. is considering issuing bonds that will mature in $16$ years with an annual coupon rate of $11$ 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 $10\mathrm{.}5$ 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 $11\mathrm{.}5$ 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.$)$