Given the following information for Houston company, answer questions 12 to 20 below: Houston is a family firm that is specialized in providing marketing services. It has 500,000 shares outstanding. Mr. Joseph Houston owns 200,000 shares, his brother Mr. Thomas Houston owns 180,000, and the remaining shares are owned by other non- family members. Houston company has a bank loan of $300,000 carrying an interest rate of 10%. The CFO has suggested to raise $600,000 in capital in order to pay back the loan and use the remaining funds for other investments. He suggested the following two options: 1. Selling of common stocks at $20. 2. Selling of convertible bonds at 10% coupon each at $1,000, convertible into 40 shares of common stocks. Conversion price is $25 The following are extracts of Houston's latest financial statements in 31/12/2019: 20. What will be the change in debt ratio if the firm chooses option 2 (after conversion)? * Balance Sheet of Houston Company (31/12/2019) O 16.75% Assets Liabilities and Equity (16.75%) Current liabilities $500,000 08.89% Common stock (par $2) $1,000,000 O 10.14% Undivided profits $450.000 O None of the above Total assets $1,950,000 Total liabilities and equity $1,950,000 Income Statement of Houston Company (31/12/2019) EBIT $195.000 Interest expenses $30,000 EBT $165,000 Taxes (30%) $49,500 Net income $115,500