Part1: Assume that you are an analyst attempting to compare the financial structures of two companies. In particular, you must analyze the debt and equity categories of the two firms and calculate a debt-to-equity ratio for each firm. The Liability and Equity categories of First Company at year- end appeared as follows: $ 500,000 800,000 Liabilities Accounts payable Loan payable Stockholders' Equity Common stock Retained earnings Total liabilities and equity 300,000 600,000 $2,200,000 First Company's loan payable bears interest at 8%, which is paid annually. The principal is due in five years. The Liability and Equity categories of Second Company at year-end appeared as follows: $ 500,000 Liabilities Accounts payable Stockholders' Equity Common stock Preferred stock Retained earnings Total liabilities and equity 300,000 800,000 600,000 $2,200,000 Second Company's preferred stock is 8%, cumulative. A provision of the stock agreement specifies that the stock must be redeemed at face value in five years. Part 2: Rohnan Inc. needs to raise $500.000. It is considering two options: a. Issue preferred stock. $100 par, 8%, cumulative, nonparticipating, callable at $110. The stock could be issued at par. b. Issue common stock. $1 par, market $10. Currently, the company has 400,000 shares outstanding distributed equally in the hands of five owners. The company has never paid a dividend. Required 1. Rohnan has asked you to consider both options and make a recommendation. It is equally concerned with cash flow and company control. Write your recommendations