Answer:
32.35% or 0.33
151.96% or 1.52
The new borrowing would make the financing structure more risky since the amount of fixed interest payment would increase significantly
Explanation:
Current debt to equity ratio:
Debt to equity=debt amount/equity amount
Current debt is $165,000
current equity is $675,000
equity =total assets-debt
debt to equity ratio=$165,000/($675,000-$165,000)=32.35%
If the $610,000 is borrowed ,the debt value would increase by $610,000
new debt value=$165,000+$610,000=$ 775,000.00
New debt to equity ratio= $775,000.00/$510,000.00=151.96%
