Order to Accurately Assess the Capital Structure of a Firm

question 99

Multiple Choice

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: 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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