CMS Corporation's balance sheet as of today is as follows: $\begin{array}{lr}
\text { Long-term debt (bonds, at par) } & \$ 10,000,000 \
\text { Preferred stock } & 2,000,000 \
\text { Common stock }(\$ 10 \mathrm{par}) & 10,000,000 \
\text { Retained earnings } & 4,000,000 \
\text { Total debt and equity }&\$26,000
\end{array}$ 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

Question

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The Answer of CMS Corporation's balance sheet as of today is as follows: $\begin{array}{lr}
\text { Long-term debt (bonds, at par) } & \$ 10,000,000 \
\text { Preferred stock } & 2,000,000 \
\text { Common stock }(\$ 10 \mathrm{par}) & 10,000,000 \
\text { Retained earnings } & 4,000,000 \
\text { Total debt and equity }&\$26,000
\end{array}$ 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

CMS Corporation's Balance Sheet as of Today Is as Follows