1.

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

Long-term debt (bonds, at par)	$12,000,000
Preferred stock	2,000,000
Common stock ($10 par)	10,000,000
Retained earnings	4,000,000
Total debt and equity	$28,000,000

The bonds have a 5% coupon rate, payable semiannually, and a par value of $1,000. They mature exactly 15 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? (Round your answer to 2 decimal places.)

2. Noncallable bonds that mature in 8 years were recently issued by Sternglass Inc. They have a par value of $1,000 and an annual coupon of 6%. If the current market interest rate is 7%, at what price should the bonds sell? (Round your answer to 2 decimal places.)