Suppose the U.S. Treasury issued $500 million face value of 10 year, 7.5% bonds on January 15, 2005 at par value. Coupon interest is paid semi-annually with the face value due in 10 years (1/15/2015).

1. On January 14, 2006, this bond is priced in the market to yield a stated 8%, using semiannual compounding. Calculate the correct price you will pay for the bond on 1/15/2006, for each $100 of face value.