Edgemont Repairs began operations on January 1, 2010. The 2010, 2011, and 2012 financial statements follow:

On January 1, 2012, the company expanded operations by taking out a $40,000 long-term loan at a 10 percent annual interest rate.

REQUIRED:a. Compute return on equity, return on assets, common equity leverage, capital structure leverage, profit margin and asset turnover.b. On January 1, 2012, the company's common stock was selling for $20 per share. Assume that Edgemont issued 2,000 shares of stock instead of borrowing the $40,000, to raise the cash needed to pay for the January 1 expansion. Re-compute the ratios in (1) for 2012. Ignore any tax effects.c. Should the company have issued the equity instead of borrowing the funds?Explain.

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2010 2012 2011 Assets S 30,000 83,000 SI13,000 S 8,000 41.000 549.000 Current assets Noncurrent assets SI0,000 45,000 S55,000 Total assets Liabilities and Shareholders' Equity Current liabilities Long-term liabilities Shareholders' equity Total liabilities and shareholders' equity S 12,000 50,000 51,000 S 7.000 10,000 38,000 ১5.00। 10.000 34,000 S113,000 S 70,000 555,000 $45,IMIO 549.000 Revenues 537.000 Operating expenses 27.000 24,000 24.000 2012 2011 2010 Interest expense Income taxes 5,000 1.000 1,000 13,000 6,000 S14,000 S10,000 6,000 S 6,000 S 2,000 10.000 S 25.000 S 12,000 10,000 Net income Dividends Number of shares outstanding 10,000