1. A review of the degree of operating leverage (DOL) It is December 31. Last year, Praxis Corporation had sales of $8,000,000, and it forecasts that next year's sales will be $8,560,000. Its fixed costs have been and are expected to continue to be $600,000, and its variable cost ratio is 55.00%. Praxis's capital structure consists of a $13.5 million bank loan, on which it pays an interest rate of 6%, and 300,000 shares of common equity. The company's profits are taxed at a marginal rate of 35%. Given this data, complete the following sentences: The percentage change in the company's sales is). (7.00% 6.30% 8.40%) The percentage change in EBIT isl). (11.76%. 6.72%. 8.40%) The degree of operating leverage (DOL) at $8,560,000 iso. (0.83 82.86 1.20) There are several ways to use and interpret a firm's DOL value. Consider the following statement and indicate whether it accurately reflects the meaning or an appropriate use of a firm's DOL value. Assume that at a given sales level, a firm's DOL is 2.5. This means that a 1% change in the firm's sales will result in a corresponding 2.5% change in the firm's EBIT. True or False: This statement accurately describes a firm's DOL. True False