Endeavor Inc. is contemplating issuing a

30-year

bond with a coupon rate of

7.03%

(annual coupon payments) and a face value of

$1,000.

Endeavor Inc. believes it can get a rating of A from Standard & Poor's. However, due to recent financial difficulties at the company, Standard & Poor's is warning that it may downgrade Endeavor's bonds to BBB. Yields on A-rated, long-term bonds are currently

6.48%,

and yields on BBB-rated bonds are

6.79%.

a. What is the price of the bond if Endeavor Inc. maintains the A rating for the bond issue?

b. What will be the price of the bond if it is downgraded?

a. What is the price of the bond if Endeavor maintains the A rating for the bond issue?

If Endeavor maintains the A rating for the bond issue, the price of the bond is

$nothing.

(Round to the nearest cent.)

b. What will be the price of the bond if it is downgraded?

If it is downgraded, the new bond's price will be

$nothing.

(Round to the nearest cent.)