XYZ company expects in the coming year: sales of 40,000 units at $10 per unit, variable operating costs of $4 per unit, fixed operating costs of $30,000, interest of $50,000, and preferred stock dividends of $24,000. The Company is in the 40% tax bracket.

1. Compute XYZ companys Degree of Total Leverage (DTL) and explain its meaning.
2. If XYZ companys Earnings Per Share (EPS) is currently $7.2, estimate its EPS in case of a 10% increase in sales revenue.