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 12 percent or 6 percent with equal probability. Assume investors are risk-neutral.

If the bonds are noncallable, what is the price of the bonds today?