Three Piggies Enterprises has no debt. Its current total value is $76 million. Assume the company sells $35 million in debt.
1. Ignoring taxes, what is the debt–equity ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
2. Assume the company’s tax rate is 38 percent. What is the debt–equity ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)