McCurdy Co.'s Class Q bonds have a 12-year maturity, $1,000 par value, and a 7.5% coupon paid semiannually (3.75% each 6 months), and those bonds sell at their par value. McCurdy's Class P bonds have the same risk, maturity, and par value, but the p bonds pay a 7.5% annual coupon. Neither bond is callable. At what price should the annual payment bond sell?

Select the correct answer.

a. $985.33

b. $981.41

c. $973.57

d. $989.25

e. $977.49