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: Use Appendix Dfor an approximate answer but calculate your final answer using the formula and financial calculator methods.

In $ millions			In $ millions
Current assets	$	60	Current liabilities	$	20
Fixed assets		60	Long-term liabilities		30
			Total liabilities	$	50
			Stockholders' equity		70
Total assets	$	120	Total liabilities and stockholders' equity	$	120

The footnotes stated that the company had $12 million in annual capital lease obligations for the next 20 years.

a. Discount these annual lease obligations back to the present at a 8 percent discount rate. (Do not round intermediate calculations. Round your answer to the nearest million. Input your answer in millions of dollars (e.g., $6,100,000 should be input as "6").)

b. Construct a revised balance sheet that includes lease obligations. (Do not round intermediate calculations. Round your answers to the nearest million. Input your answer in millions of dollars (e.g., $6,100,000 should be input as "6").)

c. Compute the total debt to total asset ratio for the original and revised balance sheets. (Input your answers as a percent rounded to 2 decimal places.)

d. Compute the total debt to total equity ratio for the original and revised balance sheets. (Input your answers as a percent rounded to 2 decimal places.)

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

	Yes
	No