3. In order to accurately assess the capital structure of a firm, it is necessary to convert its balance sheet figures to a market value basis. KJM Corporation’s balance sheet as of today is as follows:, , Long-term debt (bonds, at par) $10,000,000 , Preferred stock 2,000,000 , Common stock ($10 par) 10,000,000 , Retained earnings 4,000,000 , Total debt and equity $26,000,000 , , The bonds have a 4.0% coupon rate, payable semiannually, and a par value of $1,000. They mature exactly 10 years from today. The yield to maturity is 12%, so the bonds now sell below par. What is the current market value of the firm’s debt?, , a. $5,276,731 , b. $5,412,032 , c. $5,547,332 , d. $7,706,000 , e. $7,898,650 ,
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