Ernst company is planning to expand production. The expansion will cost $300,000, which can be financed...

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Ernst company is planning to expand production. The expansion will cost $300,000, which can be financed either by bonds at an interest rate of 10%. The current income statement before expansion is as follows: ERNST COMPANY Income Statement 200X Sales..... Less: Variable costs Fixed costs Earnings before interest and taxes Less: Interest expense. Earnings before taxes. Less: Taxes @ 40% Earnings after taxes.. Shares $3,500,000 $500,000 700,000 1,200,000 2.300.000 300,000 2,000,000 800,000 $ 1,200,000 100,000 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 $1,000,000. Interest Expenses will increase to $330,000. The tax rate is 40 percent. Construct a new Income Statement. Give a brief comment if there is a change in Earnings after tax. Ernst company is planning to expand production. The expansion will cost $300,000, which can be financed either by bonds at an interest rate of 10%. The current income statement before expansion is as follows: ERNST COMPANY Income Statement 200X Sales..... Less: Variable costs Fixed costs Earnings before interest and taxes Less: Interest expense. Earnings before taxes. Less: Taxes @ 40% Earnings after taxes.. Shares $3,500,000 $500,000 700,000 1,200,000 2.300.000 300,000 2,000,000 800,000 $ 1,200,000 100,000 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 $1,000,000. Interest Expenses will increase to $330,000. The tax rate is 40 percent. Construct a new Income Statement. Give a brief comment if there is a change in Earnings after tax.