In Order to Accurately Assess the Capital Structure of a Firm

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: $$\begin{array} { l r } \text { Long-term debt (bonds, at par) } & \$ 23,500,000 \\\text { Preferred stock } & 2,000,000 \\\text { Common stock ( } \$ 10 \text { par) } & 10,000,000 \\\text { Retained earnings } &\underline{ 4,000,000} \\\text { Total debt and equity } &\underline{\underline{ \$ 39,500,000 }}\\\end{array}$$ The bonds have a 7.0% 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) $17,436,237
B) $17,883,320
C) $18,330,403
D) $ 7,706,000
E) $ 7,898,650