The Ellis Corporation has heavy lease commitments. Prior to SFAS No. 13, it merely footnoted lease obligations in the balance sheet, which appeared as follows:

Current assets $70	Current Liabilities $30
Fixed Assets 70	Long term liabilites 30
Total Assets 140	Total Liabilities 60
	Stockholder's Equity 80
	Total liabilities & Stockholders equity $140

The footnotes stated that the company h ad 14 million in annual captial lease obligations for the next 20 years.

a. discount these annual lease obligations back to the present at a 10 percent discount rate (round to the nearest million dollars).

b. Consruct a revised balance sheet that includes lease obligation, as in table 16-7

c. compute the total debt to total assets on the original and revised balance sheets.

d. compute total debt to equity on the original and revised balance sheets.

e. In an effecient capital market environemnt, should be the consequences of SFAS No. 13, as viewed in the answers to parts c and d, change stock prices and credit ratings?

f. comment on management's perception of market efficiency (the viewpoint of the financial officer).