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Delsing Canning Company is considering an expansion of its facilities. its current income statement is as follows: Sales $6,400,000 Variable costs (50% of sales} 3,200,000 Fixed costs 1,940,000 Earnings before interest and taxes tEBIT} $1,260,000 Interest (10% cost} 480,000 Earnings before taxes (E31) 5 T80,000 Tax {40%} 312,000 Earnings after taxes tEAT} $ 463,000 Shares of common stock 340,000 Earnings per share S 1.38 The company is currently nanced with 50 percent debt and 50 percent equity [common stock, par value of $10). In order to expand the facilities, Mr. Delsing estimates a need for $3.4 million in additional nancing. His investment banker has laid out three plans for him to consider: 1. Sell $3.4 million of debt at 10 percent. 2. Sell $3.4 million of common stock at $20 per share. 3. Sell $1.70 million of debt at 9 percent and $1.70 million of common stock at $25 per share. Variable costs are expected to stay at 50 percent of sales, while xed expenses will increase to $2,440,000 per year. Delsing is not sure how much this expansion will add to sales, but he estimates that sales will rise by $1 million per year for the next ve years. Delsing is interested in a thorough analysis of his expansion plans and methods of nancingHe would like you to analyze the following: Variable costs are expected to stay at 50 percent of sales, while xed expenses will increase to $2,440,000 per year. Delsing is not sure how much this expansion will add to sales, but he estimates that sales will rise by $1 million per year tor the next ve years. Delsing is interested in a thorough analysis of his expansion plans and methods of nancingHe would like you to analyze the following: a. The break-even point for operating expenses betore and alter expansion [in sales dollars}. [Enter your answers in dollars not in millions, i.e, $1,234,567.) BreakEven Point eeee eeeeen b. The degree of operating leverage before and after expansion. Assume sales of $6.4 million before expansion and $7.4 million after expansion. Use the formula: DOL = (S- TVQ HS TVC FC}. {Round your answers to 2 decimal places.) Deg ree of Opera rig Leverage Aer expansion c1. The degree of nancial leverage before expansion. {Round your answer to 2 decimal places.) Degree of nancial leverage. I I c-Z The degree of nancial leverage for all three methods aer expansion. Assume sales of $7.4 million for this question. [Round your answers to 2 decimal places] Degreeof Financial Leverage 100% Debt 100% Equity.r 50% Debt 8. 50% Equity.r