Andrew Industries is contemplating issuing a​ 30-year bond with a coupon rate of 4.35% ​(annual coupon​ payments) and a face value of $1,000. Andrew believes it can get a rating of A from Standard...

Andrew Industries is contemplating issuing a​ 30-year bond with a coupon rate of 4.35% ​(annual coupon​ payments) and a face value of $1,000. Andrew believes it can get a rating of A from Standard and​ Poor's. However, due to recent financial difficulties at the​ company, Standard and​ Poor's is warning that it may downgrade Andrew Industries bonds to BBB. Yields on​ A-rated long-term bonds are currently 3.85%​, and yields on​ BBB-rated bonds are 4.25%.

a. What is the price of the bond if Andrew maintains the A rating for the bond​ issue?

b. What will the price of the bond be if it is​ downgraded?