Wald Corporation has outstanding bonds with a 6-year maturity, $1,000 par value, and 7% coupon paid semiannually (3.5% each 6 months), and those bonds sells at their par value. Wald has another bond with the same risk, maturity, and par value, but this second bond pays a 7% annual coupon. What is an estimate of the price of the annual coupon bond? Neither bond is callable.
a. $1015.89
b. $998.56
c. $1002.26
d. $1008.30
e. $994.18