The Ellis Corporation has heavy lease commitments. Prior toSFAS No. 13, it merely footnoted lease obligations in thebalance sheet, which appeared as follows: Use Appendix D for anapproximate answer but calculate your final answer using theformula and financial calculator methods.  

In $ millions			In $ millions
Current assets	$	65	Current liabilities	$	20
Fixed assets		65	Long-term liabilities		35
			Total liabilities	$	55
			Stockholders' equity		75
Total assets	$	130	Total liabilities and stockholders' equity	$	130

  
The footnotes stated that the company had $23 million in annualcapital lease obligations for the next 10 years.

a. Discount these annual lease obligations back tothe present at a 12 percent discount rate. (Do not roundintermediate calculations. Round your answer to the nearestmillion. Input your answer in millions of dollars (e.g., $6,100,000should be input as "6").)
  

	PV of leaseobligations million

b. Construct a revised balance sheet that includeslease obligations. (Do not round intermediate calculations.Round your answers to the nearest million. Input your answer inmillions of dollars (e.g., $6,100,000 should be input as"6").)
  

   

	Balance Sheet (in $ millions) Current assets Current liabilities Fixed assets Long-term liabilities Leased property under capitallease Obligations under capital lease Total liabilities $0 Stockholders' equity Total assets $0 Total liabilities andStockholders' equity $0

c. Compute the total debt to total asset ratio forthe original and revised balance sheets. (Input youranswers as a percent rounded to 2 decimal places.)
  

   

	Original % Revised %

d. Compute the total debt to total equity ratiofor the original and revised balance sheets. (Input youranswers as a percent rounded to 2 decimal places.)
  

   

	Original % Revised %