You plans to borrow QAR5,000,000 by issuing QAR1,000 par value bonds with a coupon rate of 7%, paying coupons every six months. The issued bonds will mature in 30 years. The yield to maturity on this type of bond is 6% today. Next year, the yield on this type of bond is expected to be either 9% or 5%, with equal probability.

a. Assuming the investors are rational, risk-neutral, and have identical expectations about the future, what should the issued bonds' price be today if the bonds are noncallable? Show your calculations and steps.

b. If the bonds are callable and expected to be called next year at QAR1,080, will their price be higher or lower than if they were noncallable, as in part (a)? Explain briefly your answer (there is no need to calculate the actual price).