Refer to the 1994 annual report of MCI and answer the following questions.

a. Compute MCI’s long-term debt-to-equity ratio over the last five years. In general, is it increasing or decreasing, and why did it change significantly during 1993 and 1994?

b. As of December 31, 1994, what portion of MCI’s long-term debt was due in the current period?

c. Did MCI issue any long-term debt in 1994, and if so, how much and what were the terms of the issuances?

d. As of December 31, 1994, what is the estimated fair market value of MCI’s outstanding long-term debt, and how does this amount compare to the book value? Explain why the market value differs from the book value and whether this difference has any impact on MCI’s financial wealth.

e. In 1993 MCI redeemed a sizable amount of its outstanding long-term debt. Flow much did the company redeem? Where did it get the funds to finance the redemptions? How large a gain or a loss was recognized on the transactions?

f. To what extent does MCI lease its facilities? Estimate the company’s annual lease pay¬ ments and the portion of leases treated as operating leases for financial reporting purposes. What portion of MCI’s long-term debt is comprised of capital leases, and what portion of MCI’s long-lived assets are comprised of capital lease facilities?