DeSoto Tools, Inc. is planning to expand production. The expansion will cost $300,000, which can either be financed by bonds at an interest rate of 14 percent or by selling 10,000 shares of common stock at $30 per share. The current income statement before expansion is as follows: DESOTO TOOLS, INC. Income Statement Year Ended Dec. 31, 20XX Sales Variable costs (30%) $1,500,000 450,000 Contribution margin Fixed costs 1,050,000 550,000 EBIT Interest expense 500,000 100,000 Earnings before taxes Taxes @ 34% 400,000 136,000 Earnings after taxes $ 264,000 Shares EPS 100,000 $2.64 After the expansion, sales are expected to increase by $1,000,000. Variable costs will remain at 30 percent of sales, and fixed costs will increase to $800,000. The tax rate is 34 percent. a. Calculate the DOL, the DFL, and the DCL before expansion. (Do not round the intermediate calculations. Round the final answers to 2 decimal places.) DOL X X DFL DCL b. Construct the income statement for the two financial plans. (Input all answer as positive values. Round EPS answers to 2 decimal places.) Debt Equity $ $ Sales Less: Variable costs (30%) Contribution Margin Fixed costs EBIT Less: Interest EBT Less: Taxes @ 34% EAT (Net Income) Common Shares EPS $ $ c. Calculate the DOL, the DFL, and the DCL, after expansion, for the two financing plans. (Do not round the intermediate calculations. Round the final answers to 2 decimal places.) Debt Equity DOL X X DFL EX DCL X d. Calculate the EBIT indifference point with the formula in the chapter. EBIT at indifference point $