Chunky Cheese Pizza has $61.6 million in bonds payable. The bond indenture states that the debt to equity ratio cannot exceed 3.19. Chunkys total assets are $201.6 million, and its liabilities other than the bonds payable are $91.6 million. The company is considering some additional financing through leasing.

Q: 17

Required:

1. Calculate total stockholders equity using the balance sheet equation. (Enter your answers in millions rounded to 1 decimal place. (i.e., $5,500,000 should be entered as 5.5).)

	Stakeholders='s equity
1- .............................	2- .........................
............................	.............................

= ????

2. Calculate the debt to equity ratio. (Enter your answers in millions rounded to 1 decimal place. (i.e., $5,500,000 should be entered as 5.5). Round ratio answer to 2 decimal place.)

debt to equity ratio

1- .............................

2- .........................

............................

.............................

= ????

= ????

3. The company enters a lease agreement requiring lease payments with a present value of $6.6 million. Will this lease agreement affect the debt to equity ratio differently if the lease is recorded as an operating lease versus a capital lease?

Yes

or

No

4-a. Will entering into the lease cause the debt to equity ratio to be in violation of the contractual agreement in the bond indenture? (assuming an operating lease).

Yes

or

No

4-b. Will entering into the lease cause the debt to equity ratio to be in violation of the contractual agreement in the bond indenture? (assuming a capital lease).

Yes

or

No