2. The computation and interpretation of the degree of financial leverage (DFL) Aa Aa It is December 31. Last year, Campbell Construction had sales of $160,000,000, and it forecasts that next year's sales will be $152,000,000. Its fixed costs have been-and are expected to continue to be-$80,000,000, and its variable cost ratio is 21.00%. Campbell's capital structure consists of a $15 million bank loan, on which it pays an interest rate of 8%, and 750,000 shares of common equity. The company's profits are taxed at a marginal rate of 40%. Given this data, complete the following sentences: . The company's percentage change in EBIT is The percentage change in Campbell's earnings per share (EPS) is The degree of financial leverage (DFL) at $152,000,000 is The following are the two principal equations that can be used to calculate a firm's DFL value: Percentage Change in EPS DFL (at EBIT = $X) = Percentage Change in EBIT DFL (at EBIT = $X) = EBIT {EBIT - Interest - [Preferred Dividends / (1 - Tax Rate)]} Consider the following statement about DFL, and indicate whether or not it is correct. Assume that a firm's fixed capital costs remain constant across a range of operating profit (EBIT) values. The firm's DFL will vary across the range of EBIT values. 00 False True