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MS 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...

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Finance

MS Corporation's balance sheet as of today is as follows:

Long-term debt (bonds, at par)$10,000,000
Preferred stock2,000,000
Common stock ($10 par)10,000,000
Retained earnings4,000,000
Total debt and equity

$26,000,000

The bonds have an 6.4% coupon rate, payable semiannually, and apar value of $1,000. They mature exactly 10 years from today. Theyield to maturity is 12%, so the bonds now sell below par. What isthe current market value of the firm's debt?

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