omputation and interpretation of the degree of financial leverage (DFL)) It is December 31. Last year, Water and Power Company (W&P) had sales of $80,000,000, and it forecasts that next year's sales will be $83,200,000. Its fixed costs have been-and are expected to continue to be-$36,000,000, and its variable cost ratio is 10.00%. 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 $80,000,000 is The following are the two principal equations that can be used to calculate a firm's DFL value: