Growing Company is considering an expansion of its facilities. Its current income statement is as follows: Sales $5,000,000 Less: Variable expense (50% of sales) 2,500,000 Fixed expense 1,800,000 Earnings before interest and taxes (EBIT) 700,000 Interest (10% cost) 200,000 Earnings before taxes (EBT) 500,000 Tax (34%) 170,000 Earnings after taxes (EAT) $330,000 Shares of Common stock 200,000 Earnings per share (EPS) $1.65 Growth Company is currently financed with 50 percent debt and 50 percent equity (common stock). To expand facilities, Growth's CEO has received estimates for a need for $2 million in additional financing. Growth's CFO has laid out three plans for financing: 1. Sell $2 million of debt at 13 percent. 2. Sell $2 million of common stock at $20 per share 3. Sell $1 million of debt at 12 percent and $1 million of common stock at $25 per share. Variable costs are expected to stay at 50 percent of sales, while fixed expenses will increase to $2,300,000 per year. The CEO is not sure how much this expansion will add to sales, but estimates that sales will rise by $1 million per year for the next five years. The CEO is interested in a thorough analysis of the expansion plans and methods of financing. The CEO has asked the CFO to analyze the following: a. The break-even point for operating expenses before and after expansion (in sales dollars). b. The degree of operating leverage (DOL) before and after expansion assuming sales of $5 million before expansion and $6 million after expansion. C. The degree of financing leverage (DFL) before expansion at sales of $5 million and for all three methods of financing after expansion, assuming sales of $6 million after expansion. d. Compute EPS under all three methods of financing the expansion at $6 million in sales (first year) and $10 million in sales (last year)