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Pybus, Inc. is considering issuing bonds that will mature in 17 years with an annual coupon rate of 12 percent. Their par value will be

Pybus, Inc. is considering issuing bonds that will mature in 17 years with an annual coupon rate of 12 percent. Their par value will be $1,000, and the interest will be paid semiannually. Pybus is hoping to get a AA rating on its bonds and, if it does, the yield to maturity on similar AA bonds is 11.5 percent. However, Pybus is not sure whether the new bonds will receive a AA rating. If they receive an A rating, the yield to maturity on similar A bonds is 12.5 percent. What will be the price of these bonds if they receive either an A or a AA rating?

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