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1a. Andrew Industries is contemplating issuing a 30-year bond with a coupon rate of 10.27% (annual coupon payments) and a face value of$1,000.Andrew believes it

1a. Andrew Industries is contemplating issuing a 30-year bond with a coupon rate of 10.27% (annual coupon payments) and a face value of$1,000.Andrew believes it can get a rating of A from Standard and Poor's. However, due to recent financial difficulties at the company, Standard and Poor's is warning that it may downgrade Andrew Industries bonds to BBB. Yields on A-rated, long-term bonds are currently9.77%,and yields on BBB-rated bonds are 10.17%. a. What is the price of the bond if Andrew maintains the A rating for the bond issue? b. What will the price of the bond be if it is downgraded?

1b.Assume Evco, Inc., has a current stock price of $64 and will pay a $1.80 dividend in one year; its equity cost of capital is 20%.What price must you expect Evco stock to sell for immediately after the firm pays the dividend in one year to justify its current price?The expected price is $_____?

1c. Anle Corporation has a current price of $19,is expected to pay a dividend of $2 in one year, and its expected price right after paying that dividend is $20. a. What is Anle's expected dividend yield? b. What is Anle's expected capital gain rate? c. What is Anle's equity cost of capital?

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