7. Sensitivity analysis (S10.1) A project currently generates sales of $10 million, variable costs equal 50% of

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7. Sensitivity analysis (S10.1) A project currently generates sales of $10 million, variable costs equal 50% of sales, and fixed costs are $2 million. The firm’s tax rate is 21%. What are the effects of the following changes on cash flow?

a. Sales increase from $10 million to $11 million.

b. Variable costs increase to 65% of sales.

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Principles Of Corporate Finance

ISBN: 9781264080946

14th Edition

Authors: Richard Brealey, Stewart Myers, Franklin Allen, Alex Edmans

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Question Posted: Jul 31, 2024 08:00 AM

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7. Sensitivity analysis (S10.1) A project currently generates sales of $10 million, variable costs equal 50% of

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Principles Of Corporate Finance

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