In order to accurately assess the capital structure of a firm, it is necessary to convert its balance sheet figures from historical book values to market values. KJM Corporation's balance sheet (book values) as of today is as follows: Long-term debt (bonds, at par)$23,500,000 Preferred stock2,000,000 Common stock ($10 par)10,000,000 Retained earnings4,000,000 Total debt and equity$39,500,000 ? The bonds have a 8.3% coupon rate, payable semiannually, and a par value of $1,000. They mature exactly 10 years from today. The yield to maturity is 11%, so the bonds now sell below par. What is the current market value of the firm's debt?
A. $19,708,741
B. $22,073,790
C. $24,241,752
D. $21,679,615
E. $15,569,906
Answer: A
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