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DeSoto Tools, Inc. is planning to expand production. The expansion will cost $ 3 0 0 , 0 0 0 , which can either be

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:
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.)
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