Question: Montclair Company is considering a project that will require a $670,000 loan. It presently has total liabilities of $135,000 and total assets of $705,000.

Montclair Company is considering a project that will require a $670,000 loan. It presently has total liabilities of $135,000 and total assets of $705,000. 1. Compute Montclair's (a) current debt-to-equity ratio and (b) the debt-to-equity ratio assuming it borrows $670,000 to fund the project. 2. If Montclair borrows the funds, does its financing structure become more or less risky?

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