It is December 31. Last year, Water and Power Company (W&P) had sales of $160,000,000, and it forecasts that next year's sales will be $166,400,000. Its fixed costs have been-and are expected to continue to be-$104,000,000, and its variable cost ratio is 15.00%. W&P's capital structure consists of a $15 million bank loan, on which it pays an interest rate of 12%, and 5,000,000 shares of outstanding common equity. The company's profits are taxed at a marginal rate of 35%. Given this data, compute the following: Note: Round intermediate calculations to two decimal places. The company's percentage change in EBIT is The percentage change in W&P's earnings per share (EPS) is The degree of financial leverage (DFL) at $166,400,000 is . The following are the two principal equations that can be used to calculate a firm's DFL value: DFL (at EBIT = $X) = Percentage Change in EPS 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 at a given level of sales, the firm's DFL is 4.50. This means that a 1% decrease in the firm's EBIT will result in a corresponding 4.5% increase in the firm's EBIT. O True False