I need help answering question A and B

Need help question A and B

Problem 5-23 Phelps Canning Company is considering an expansion of its facilities. Its current income statement is as follows: Sales Less: Variable expense (sex of sales) Fixed expense $5,799,000 2,850,000 1,870, Earnings before interest and taxes (EBIT) Interest (10% cost) 980,000 340,000 Earnings before taxes (EBT) Tax (35) 640,000 224,00 Earnings after taxes (EAT) 5416,000 Shares of common stock 270,000 $1.54 EPS Phelps Canning Company is currently financed with 50 percent debt and 50 percent equity (common stock). To expand facilities, Mr. Phelps estimates a need for $2.7 million in additional financing. His investment dealer has laid out three plans for him to consider: 1. Sell $2.7 million of debt at 9 percent. 2. Sell $27 million of common stock at $25 per share. 3. Sell $1.35 million of debt at 8 percent and $1.35 million of common stock at $30 per share. Variable costs are expected to stay at 50 percent of sales, while fixed expenses will increase to $2,370,000 per year. Mr. Phelps is not sure how much this expansion will add to sales, but he estimates that sales will rise by $1.35 million per year for the next five years. Mr. Phelps is interested in a thorough analysis of his expansion plans and methods of financing. 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 millions.) a. The break-even point for operating expenses before and after expansion in sales dollars) (Enter the answers in dollars not in millions.) Boints Before expansion After expansion Slopped b. The DOL before and after expansion. Assume sales of $57 million before expansion and $67 million after expansion (Round the final answers to 2 decimal places.) Before expansion After expansion (-1. The DFL before expansion at sales of $5.7 million (Round the final answers to 2 decimal places.) DFL X c-2 The DFL for all three methods after expansion. Assume sales of $6.7 million (Round the final answers to 2 decimal places.) Teen Debt 100% Equity Sex Debt & Sex Equity d. Compute EPS under all three methods of financing the expansion at $6.7 million in sales (first year) and $10.7 million in sales (last year. (Round the final answers to 2 decimal places.) 1ees Debt 100% Equity 50% Debt 503 Equity Problem 5-23 Phelps Canning Company is considering an expansion of its facilities. Its current income statement is as follows: Sales Less: Variable expense (sex of sales) Fixed expense $5,799,000 2,850,000 1,870, Earnings before interest and taxes (EBIT) Interest (10% cost) 980,000 340,000 Earnings before taxes (EBT) Tax (35) 640,000 224,00 Earnings after taxes (EAT) 5416,000 Shares of common stock 270,000 $1.54 EPS Phelps Canning Company is currently financed with 50 percent debt and 50 percent equity (common stock). To expand facilities, Mr. Phelps estimates a need for $2.7 million in additional financing. His investment dealer has laid out three plans for him to consider: 1. Sell $2.7 million of debt at 9 percent. 2. Sell $27 million of common stock at $25 per share. 3. Sell $1.35 million of debt at 8 percent and $1.35 million of common stock at $30 per share. Variable costs are expected to stay at 50 percent of sales, while fixed expenses will increase to $2,370,000 per year. Mr. Phelps is not sure how much this expansion will add to sales, but he estimates that sales will rise by $1.35 million per year for the next five years. Mr. Phelps is interested in a thorough analysis of his expansion plans and methods of financing. 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 millions.) a. The break-even point for operating expenses before and after expansion in sales dollars) (Enter the answers in dollars not in millions.) Boints Before expansion After expansion Slopped b. The DOL before and after expansion. Assume sales of $57 million before expansion and $67 million after expansion (Round the final answers to 2 decimal places.) Before expansion After expansion (-1. The DFL before expansion at sales of $5.7 million (Round the final answers to 2 decimal places.) DFL X c-2 The DFL for all three methods after expansion. Assume sales of $6.7 million (Round the final answers to 2 decimal places.) Teen Debt 100% Equity Sex Debt & Sex Equity d. Compute EPS under all three methods of financing the expansion at $6.7 million in sales (first year) and $10.7 million in sales (last year. (Round the final answers to 2 decimal places.) 1ees Debt 100% Equity 50% Debt 503 Equity