DeSoto Tools Inc. is planning to expand production. The expansion will cost $$300,000,$ which can be financed either by bonds at an interest rate of $14$ percent or by selling $10,000$ shares of common stock at $$30$ per share.The current income statement before expansion is as follows:DESOTO TOOLS, INC.Income Statement$20$X$1$SalesLess: Variable costs$$450,000$$$1,500,000$Fixed costs$550,0001,000,000$Earnings before interest and taxes$500,000$Less: Interest expense$100\mathrm{.}000$Earnings before taxes$ $400\mathrm{.}000$Less: Taxes & $34\%..$Earnings after taxes$136\mathrm{.}000$$ $264,000$Shares $..\mathrm{.}100,000$Earnings per share$$2\mathrm{.}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\mathrm{.}000.$ The tax rate is $34$ percent.$*$ Calculate the degree of operating leverage, the degree of financial leverage. and the degree of combined leverage before expansion. $($For the degree of operating leverage, use the formula developed in footnote $2$; for the degree of combined leverage. use the formula developed in footnote $3,$ These instructions apply throughout this problem.$)*$ Construct the income statement for the two alternative financing plans.$*$ Calculate the degree of operating leverage, the degree of financial leverage. and the degree of combined leverage, after expansion.$*$ Explain which financing plan you favor and the risks involved with each plan.