Delsing Canning Company is considering an expansion of its facilities. Its current Income statement is as follows: $5,300,000 2,650,000 1,830,000 Sales Variable costs (50% of sales) Fixed costs Earnings before interest and taxes (EBIT) Interest (10% cost) Earnings before taxes (EBT) Tax (30%) Earnings after taxes (EAT) Shares of common stock Earnings per share $ 820,000 260,000 $ 560,000 168,000 $ 392,000 230,000 1.70 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 $2.3 million In additional financing. His Investment banker has laid out three plans for him to consider: 1. Sell $2.3 million of debt at 11 percent. 2. Sell $2.3 million of common stock at $25 per share. 3. Sell $1.15 million of debt at 10 percent and $1.15 million of common stock at $40 per share. Variable costs are expected to stay at 50 percent of sales, while fixed expenses will increase to $2,330,000 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). (Enter your answers in dollars not in millions, I.e, $1,234,567.) Break-Even Point Before expansion After expansion b. The degree of operating leverage before and after expansion. Assume sales of $5.3 million before expansion and $6.3 million after expansion. Use the formula: DOL = (S- TVO/(S-TVC-FC). (Round your answers to 2 decimal places.) Degree of Operating Leverage Before expansion After expansion C-1. The degree of financial leverage before expansion. (Round your answer to 2 decimal places.) Degree of financial leverage c-2. The degree of financial leverage for all three methods after expansion. Assume sales of $6.3 million for this question. (Round your answers to 2 decimal places.) Degree of Financial Leverage 100% Debt 100% Equity 50% Debt & 50% Equity d. Compute EPS under all three methods of financing the expansion at $6.3 million in sales (first year) and $10.3 million in sales (last year). (Round your answers to 2 decimal places.) Earnings per Share First Year Last Year 100% Debt 100% Equity 50% Debt & 50% Equity Delsing Canning Company is considering an expansion of its facilities. Its current Income statement is as follows: $5,300,000 2,650,000 1,830,000 Sales Variable costs (50% of sales) Fixed costs Earnings before interest and taxes (EBIT) Interest (10% cost) Earnings before taxes (EBT) Tax (30%) Earnings after taxes (EAT) Shares of common stock Earnings per share $ 820,000 260,000 $ 560,000 168,000 $ 392,000 230,000 1.70 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 $2.3 million In additional financing. His Investment banker has laid out three plans for him to consider: 1. Sell $2.3 million of debt at 11 percent. 2. Sell $2.3 million of common stock at $25 per share. 3. Sell $1.15 million of debt at 10 percent and $1.15 million of common stock at $40 per share. Variable costs are expected to stay at 50 percent of sales, while fixed expenses will increase to $2,330,000 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). (Enter your answers in dollars not in millions, I.e, $1,234,567.) Break-Even Point Before expansion After expansion b. The degree of operating leverage before and after expansion. Assume sales of $5.3 million before expansion and $6.3 million after expansion. Use the formula: DOL = (S- TVO/(S-TVC-FC). (Round your answers to 2 decimal places.) Degree of Operating Leverage Before expansion After expansion C-1. The degree of financial leverage before expansion. (Round your answer to 2 decimal places.) Degree of financial leverage c-2. The degree of financial leverage for all three methods after expansion. Assume sales of $6.3 million for this question. (Round your answers to 2 decimal places.) Degree of Financial Leverage 100% Debt 100% Equity 50% Debt & 50% Equity d. Compute EPS under all three methods of financing the expansion at $6.3 million in sales (first year) and $10.3 million in sales (last year). (Round your answers to 2 decimal places.) Earnings per Share First Year Last Year 100% Debt 100% Equity 50% Debt & 50% Equity