Company A is 100 percent owned by Mr A. The summary of Company A's financial statement information is as follows:

1. Calculate Company A's return on equity for 2016.
2. Company A is considering borrowing $50 000 for additional assets that would earn the company the same return on assets it has historically earned, according to the financial statement information above. The cost of borrowing this money is 8 percent. Should the company borrow the money? (Assume there are no alternative sources of funding.) Show all calculations.
3. Place yourself in the role of the local bank manager. Mr A has approached you to lend the company the required $50 000 mentioned above. (Detailed financial statement information has already been presented to you.) What additional information would you require, if any? What financial statement ratios, in addition to those calculated in previous parts of this problem, would be useful in aiding your decision? Do not calculate the ratios; just mention or describe them.

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BALANCE SHEET AS AT 30 SEPTEMBER 2016 Total assets Total liabilities Total shareholders' equity Total liabilities and shareholders' equity INCOME STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2016 Revenue Expenses Interest General and operating expenses Income tax (33%) Net profit for the year $ Balance at beginning of the year Net profit for the year Balance at end of year 2 000 19000 3.000 Note showing changes in retained earnings for the year ended 30 September 2016 $ 80000 35000 45 000 80 000 30 000 24 000 6000 17 000 6000 23 000