This question guides you to think about the role of credit rating agencies. Sup- pose S&P credit rating is the only thing that determines companies' cost of borrow- ing interest rate on debt). Below is the interest rate associated with each credit rating. Credit rating Interest rate AAA 3% AA 3.5% A 4.5% BBB 5.5% BB 7.5% Consider a company that is issuing a ten-year bond with par value $1 billion today. 3 (a) Suppose the company currently has a credit rating of AA. How much inter- est expense can it save over the next ten years if its credit rating become AAA? (b) Suppose the company currently has a credit rating of BBB. How much addi- tional interest expense does it incur over the next ten years if its credit rating drops to BB? This question guides you to think about the role of credit rating agencies. Sup- pose S&P credit rating is the only thing that determines companies' cost of borrow- ing interest rate on debt). Below is the interest rate associated with each credit rating. Credit rating Interest rate AAA 3% AA 3.5% A 4.5% BBB 5.5% BB 7.5% Consider a company that is issuing a ten-year bond with par value $1 billion today. 3 (a) Suppose the company currently has a credit rating of AA. How much inter- est expense can it save over the next ten years if its credit rating become AAA? (b) Suppose the company currently has a credit rating of BBB. How much addi- tional interest expense does it incur over the next ten years if its credit rating drops to BB