Exercise 10-25A (Algo) Determining the effects of financing alternatives on ratios L. 108 The company wishes to raise $35,000 in cash and is considering two financing oprons caywun can seli $35,000 of bonds payable, or Ti can issue addilional common stock for 535,000 . To help in the decision process, Cioyton's management wants to determine the efiects of each alternative on its current ratio and debt-to-assets ratio, Required a-1. Compute the current ratio for Clayton's management. Note: Round your answers to 2 decimal places. a-2. Compute the debt-to-assets ratio for Clayton's management. Note: Round your answers to 1 decimal place. b. Assume that after the funds are invested, EBIT amounts to $19,100. Also assume the company pays $4,300 in dividends or $4,300 in interest depending on which source of financing is used. Based on a 30 percent tax rate, determine the amount of the increase in' retained earnings that would result under each financing option