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(Related to Checkpoint 9.3) (Bond valuation) Pybus, Inc. is considering issuing bonds that will mature in 21 years with an annual coupon rate of

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(Related to Checkpoint 9.3) (Bond valuation) Pybus, Inc. is considering issuing bonds that will mature in 21 years with an annual coupon rate of 8 percent. Their par value will be $1,000, and the interest will be K paid semiannually. Pybus is hoping to get a AA rating on its bonds and, if a 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 & they receive either an A or a AA rating? a. The price of the Pybus bonds if they receive a AA rating will be $(Round to the nearest cent) b. The price of the Pybus bonds if they receive an A rating will be 1 (Round to the nearest cent)

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