Andrew industries is contemplating issuing a 30-year bond with a coupon rate of 5.36% (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 currently 4.86%, and yields on BBB-rated bonds are 5.26%.

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?