Last year a firm issued 20-year, 8% annual coupon bonds at a par value of $1,000.

Suppose that one year later the going market interest rate drops to 6%. What is the new price of the bonds assuming that they now have 19 years to maturity?

Suppose that one year after issue, the going market interest rate is 10% (rather than 6%). What would the price have been?

Please explain your reasoning.

Answer all parts of the question for a good rating. Also show how to solve in excel and on a financial calculator.