Reynolds Construction (RC) needs a piece of equipment that costs $300. RC can either lease the equipment or borrow $300 from a local bank and buy the equipment. If the equipment is leased, the lease would not have to be capitalized. RC's balance sheet prior to the acquisition of the equipment is as follows: Current assets Net Fixed assets Total assets $350 450 $800 Debt Equity Total claims $500 300 $800 a. 1. What is RC's current debt ratio? Round your answer to two decimal places. 2. What would be the company's debt ratio if it purchased the equipment? Round your answer to one decimal place 3. What would be the debt ratio if the equipment were leased? Round your answer to two decimal places b. Would the company's financial risk be different under the leasing and purchasing alternatives? I. The company's financial risk (assuming the implied interest rate on the lease is less than the interest rate on the loan) is no different whether the equipment is leased or purchased II. The company's financial risk (assuming the implied interest rate on the lease is greater than the interest rate on the loan) is no different whether the equipment is leased or purchased III. The company's financial risk (assuming the implied interest rate on the lease is equivalent to the loan) is greater if the equipment s leased IV. The company's financial risk (assuming the implied interest rate on the lease is equivalent to the loan) is no different whether the equipment is leased or purchased -Select