It is December 31. Last year, Campbell Construction had sales of $80,000,000 and it forecasts that next year's sales will be $72,000,000. Its fixed costs have been--and are expected to continue to be--$40,000,000, and its variable cost ratio is 21%. Campbells 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 companys profits are taxed at a marginal rate of 40%. Given this data, complete the following sentences:

-The companys percentage change in EBIT is : -24.52%, -27.24%, or -32.69%

-The percentage change in Campbell's earnings per share (EPS) is: -40.25%, -23%, or -28.75%

-The degree of financial leverage (DFL) at $72,000,000 is : 2.88, 1.06, or 0.95

The following are the two principal equations that can be used to calculate a firms DFL value:

DFL = %change in EPS / % change in EBIT

DFL = EBIT / {EBIT-INTEREST-[PREFERRED DIVIDENDS / (-TAX RATE)]}

Consider the following statement about DFL and indicate whether or not it is correct

All other factors remaining constant, the larger the proportion of common equity used by the firm in its capital structure, the smaller the firms DFL.

Is the above statement TRUE or FALSE?