Delsing Canning Company is considering an expansion of its facilities. Its current income statement is as follows:

Sales $ $5,200,000$

Variable costs $(50\%$ of sales$)2,600,000$

Fixed costs $1,820,000$

Earnings before interest and taxes $($EBIT$)$ $ $780,000$

Interest $(10\%$ cost$)240,000$

Earnings before taxes $($EBT$)$ $ $540,000$

Tax $(40\%)216,000$

Earnings after taxes $($EAT$)$ $ $324,000$

Shares of common stock $220,000$

Earnings per share $ $1\mathrm{.}47$

The company is currently financed with $50$ percent debt and $50$ percent equity $($common stock, par value of $$10).$ In order to expand the facilities, Mr$.$ Delsing estimates a need for $$2\mathrm{.}2$ million in additional financing. His investment banker has laid out three plans for him to consider:

Sell $$2\mathrm{.}2$ million of debt at $10$ percent.

Sell $$2\mathrm{.}2$ million of common stock at $$20$ per share.

Sell $$1\mathrm{.}10$ million of debt at $9$ percent and $$1\mathrm{.}10$ million of common stock at $$25$ per share.

Variable costs are expected to stay at $50$ percent of sales, while fixed expenses will increase to $$2,320,000$ per year. Delsing is not sure how much this expansion will add to sales, but he estimates that sales will rise by $$1$ million per year for the next five years.

Delsing is interested in a thorough analysis of his expansion plans and methods of financing.He would like you to analyze the following:

a$.$ The break$-$even point for operating expenses before and after expansion $($in sales dollars$).$

Note: Enter your answers in dollars not in millions, i$.$e$,$ $$1,234,567.$

b$.$ The degree of operating leverage before and after expansion. Assume sales of $$5\mathrm{.}2$ million before expansion and $$6\mathrm{.}2$ million after expansion. Use the formula: DOL$=($S$$TVC$)($S$$TVC$$FC$)$

DOL

$=$

S

$-$

T

V

C

S

$-$

T

V

C

$-$

FC

$.$

Note: Round your answers to $2$ decimal places.

c$-1.$ The degree of financial leverage before expansion.

Note: Round your answer to $2$ decimal places.

c$-2.$ The degree of financial leverage for all three methods after expansion. Assume sales of $$6\mathrm{.}2$ million for this question.

Note: Round your answers to $2$ decimal places.

d$.$ Compute EPS under all three methods of financing the expansion at $$6\mathrm{.}2$ million in sales $($first year$)$ and $$10\mathrm{.}2$ million in sales $($last year$).$

Note: Round your answers to $2$ decimal places.