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Phelps Canning Company is considering an expansion of its facilities. Its current income statement is as follows: Sales 36,600,000 Less: Variable expense {50% of sales} 3,300,000 Fixed expense 1,960,000 Earnings before interest and taxes {EBIT} 1,340,000 Interest (10% cost] 520,000 Earnings before taxes (BET) 020,000 Tax {35%) 20?,000 Earnings after taxes {EAT} $533,000 Shares of common stock 360,000 EPS $1.03 Phelps Canning Company is currently nanced with 50 percent debt and 50 percent equity [common stock). To expand facilities, Mr. Phelps estimates a need for $3.6 million in additional financing. His investment dealer has laid out three plans for him to consider: 1. Sell $3.6 million of debt at12 percent. 2. Sell $3.6 million of common stock at $30 per share. 3. Sell $1.80 million of debt at 11 percent and $1.80 million of common stock at $40 per share. Variable costs are expected to stay at 50 percent of sales, while fixed expenses will increase to $2,460,000 per year. Mr. Phelps is not sure how much this expansion will add to sales. but he estimates that sales will rise by $1.80 million per year for the next five years. Mr. Phelps is 'Interested in a thorough analysis of his expansion plans and methods of nancing. He would like you to analyze the following: a. The break-even point for operating expenses before and after expansion (in sales dollars]. {Enter the answers In dollars not In mllllons.} Breakmu int. Before expansion 5 After expansion 3 h. The DOL before and after expansion. Assume sales of $6.6 million before expansion and $16 million after expansion. [Round the nal answers to 2 decimal places.} nor. Before expansion 3 After expansion X c1. The DFL before expansion at sales of $5.5 million. (Round the nal answers to 2 decimal places} DFL EX c-2. The DFL for all three methods after expansion. Assume sales of $7.6 million. (Round the final answers to 2 decimal places.) DFL 100% Debt X 100% Equity X 50% Debt & 50% Equity d. Compute EPS under all three methods of financing the expansion at $7.6 million in sales (first year) and $10.5 million in sales (last year). (Round the final answers to 2 decimal places.) EPS First year Last year 100% Debt S S 100% Equity 50% Debt & 50% Equity