Curley's Fried Chicken Kitchen operates two southern cooking restaurants in St.Louis, Missouri, and has the following financialstructure:

Accounts payable $100,000

Short-term debt $400,000

Current liabilities $500,000

Long-term debt $2,000,000

Owner's equity $1,500,000

Total $4,000,000

The firm is considering an expansion that would involve raising an additional $2.0

a.What are thefirm's debt ratio andinterest-bearing debt ratio in its present capitalstructure?

b.If the firm wants to have a debt ratio of 50 percent, how much equity does the firm need to raise in order to finance theexpansion?