MDR Corporation plans to issue a $1,000,000, 10 year bond with a stated rate (coupon rate) of 10%. The bond pays semiannual interest to its investors. The effective or market rate (yield to maturity) is 12%. Assume the bond is issued today. For this bond, determine the following:

1. What is present value of the $1,000,000 bond payment, 10 years from today?

2. What is the present value of the interest or coupon payments?

3. What is the price of the bond?

4. Is the bond being sold at a premium or a discount? Explain.

For each of the above, show your work. If you use a financial calculator, be sure to indicate what values you input as variables.