Andrew Industries is contemplating issuing a 30-year bond with a coupon rate of 7% (annual coupon payments) and a face value of $1,000. Andrew believes it can get a rating of A from Standard and Poors. However, due to recent financial difficulties at the companies, Standard and Poors is warning that it may downgrade Andrew Industries bonds to BBB. Yields on A-rated long term bonds are currently 6.5% and yields on BBB rated bonds are 6.9%

What is the price of the bond if Andrew maintains the A rating for the bond issue?

What will the price of the bond be if its downgraded?