KIC, Inc., plans to issue $4 million of bonds with a coupon rate of 7 percent and 10 years to maturity. The current market interest rates on these bonds are 6 percent. In one year, the interest rate on the bonds will be either 8 percent or 4 percent with equal probability. Assume investors are risk-neutral.

a.If the bonds are noncallable, what is the price of the bonds today? Assume a par value of $1,000 and semiannual payments.(Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Price of the bonds$