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DeSoto Tools Incorporated is planning to expand production. The expansion will cost $2,700,000, which can be financed either by bonds at an interest rate of

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DeSoto Tools Incorporated is planning to expand production. The expansion will cost $2,700,000, which can be financed either by bonds at an interest rate of 8 percent or by selling 54,000 shares of common stock at $50 per share. The current income statement before expansion is as follows: DE: Inc After the expansion, sales are expected to increase by $1,570,000. Variable costs will remain at 20 percent of sales, and fixed costs will increase to $1,364,000. The tax rate is 30 percent. Calculate the degree of operating leverage before expansion. Calculate the degree of financial leverage before expansion. Calculate the degree of combined leverage before expansion

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