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:
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Long-term debt (bonds, at par)
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$23,500,000
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Preferred stock
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2,000,000
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Common stock ($10 par)
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10,000,000
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Retained earnings
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4,000,000
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Total debt and equity
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$39,500,000
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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?