Problem
McCurdy Co.'s Class Q bonds have a 12-year maturity, $1,000 par value, and a 7% coupon paid semiannually (3.5% 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% annual coupon. Neither bond is callable. At what price should the annual payment bond sell?