Calculate the initial effect of this lease on debt ratio

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Reference no: EM131202296

ABC Corporation’s balance sheet shows assets of $10,000,000, liabilities of $5,500,000, and equity of $4,500,000. ABC enters into a capital lease for certain equipment. On the date of signing, the present value of the lease payments is $700,000. Calculate the initial effect of this lease on ABC’s debt ratio.

Reference no: EM131202296

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