1.) Out of these 3, which financing option has the highest Financial Leverage (D/E ratio)? Explain why this is using the information in the chart.

2.) Which financing option has the highest level of risk to stockholders? Explain why this is using the information in the chart.

3.) How might the company's decision change as the cost of borrowing rises?

Proforma Balance Sheet at Year 6 End Debt/Equity Ratio Return on Equity (ROE) Return on Assets