Montclair Company is considering a project that will require a $610,000 loan. It presently has total liabilities of $165,000 and total assets of $675,000.

1. Compute Montclairs (a) current debt-to-equity ratio and (b) the debt-to-equity ratio assuming it borrows $610,000 to fund the project.
2. If Montclair borrows the funds, does its financing structure become more or less risky?