Given the following information for Johnson company, answer questions 9 to 17 below: Jobinson is a family firm that is specialized in manufacturing electrical equipment. It has 1 million shares outstanding distributed as follows: Name of the shareholder Number of shares Mr. Tom Johnson 500,000 Mrs. Kate Johnson 350,000 Others 150,000 The company has a bank loan of S400,000 carrying an interest rate of 11%. The investment banker 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: Option Description Option A Sell of common stocks at $30 Sell of 9% convertible bonds. Each converted into 25 shares of Option B common stocks. Conversion price $40. The following are extracts of Johnson's latest financial statements in 31/12/2019: Assets Balance Sheet of Johnson Company (31/12/2019) Liabilities and Equity Current liabilities $650,000 Common stock (par $10) $10,000,000 Undivided profits $1,230,000 Total assets $11,880,000 $11,880,000 Total liabilities and equity Income Statement of Johnson Company (31/12/2019) EBIT $1,782,000 Interest expenses $44,000 EBT S1,738,000 Taxes (35%) S608,300 Net income SI, 129,700 5 points 17. What will be the change in debt ratio if the firm chooses option B (after conversion)? * 2.98% O (1.35%) 5.21% (3.40%) None of the above