Item$3$

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Item $3$

Assets, Incorporated, plans to issue $$6$ million of bonds with a coupon rate of $7\mathrm{.}8$ percent, a par value of $$1,000,$ semiannual coupons, and $25$ years to maturity. The current market interest rate on these bonds is$7\mathrm{.}1$ percent. In one year, the interest rate on the bonds will be either $9$ percent or $5$ percent with equal probability. Assume investors are risk$-$neutral.

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a$.$

If the bonds are noncallable, what is the price of the bonds today? $($Do not round intermediate calculations and round your answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

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