On January 1, 2017, Mermaid Inc. issued 10-year bonds with a face amount of 40,000,000 and a contract rate of 8% payable annually on January 1. The effective-interest rate on the bonds is 10%. Present value factors are as follows:

At 8% At 10%

PV of 1 for 10 periods 0.463 0.386

PV of an ordinary annuity if 1 for 10 periods 6.710 6.145

Total issue price of the bonds was?

(a)40,000,000

(b)36,800,000

(c)35,104,000

(d)39,200,000