You are given the following: LCM, Inc. is going to lease some equipment for 15 years at an annual charge of $200,000 - payable at the end of each year. There will be no salvage value LCM's borrowing rate is 5%. The lease satisfies all the criteria of a Capital Lease. The Before balance sheet is noted below. To do: 1. Fill-in LCM's balance sheet and debt ratio at the lease's inception. 2. Question: What would the balance sheet look like one year into the lease (i.e., year later")? Assume straight-line depreciation for the asset, and Remember: the lease obligation is amortized at 5%. This is a two- (or three-) part question, one part having to do with calculating the depreciated asset value of the lease; the other having to do with the amortized lease obligation. They are not the same. Therefore, an adjustment will need to be made to the balance sheet in order to make it balance. We shall assume that the borrowing rate and lease rates are the same. (000) Year Later Year Later Inception Inception Before $200 Before $100 Current Assets Leased Equipment Fixed Assets 1,800 Current liabilities Lease Obligation Long-term Debt Equity Total Debt + Equity 900 1,000 $2,000 $2,000 Total Assets Debt Ratio 50%