Debt/Equity Ratio. The present capital structure of Jones Corporation is shown below. Debentures                                        $1,200,000 Collateral bonds...

Debt/Equity Ratio. The present capital structure of Jones Corporation is shown below.

Debentures                                        $1,200,000

Collateral bonds                               2,800,000

Preferred stock                                                700,000

Common stock                                  2,600,000

Total                                                      $7,300,000

There is a high financial leverage position

The business is worth $4.7 million as a going concern. The trustee has formulated a less leveraged capital structure having a total capital of $4.7 million as follows:

Debentures                        $ 800,000

Collateral bonds               1,500,000

Income bonds                   1,300,000

Preferred stock                                400,000

Common stock                  700,000

Total                                      $4,700,000

What is the new debt/equity ratio?