Question
A project currently generates sales of $10.4 million, variable costs equal to 50% of sales, and fixed costs of $2.2 million. The firm's tax rate
A project currently generates sales of $10.4 million, variable costs equal to 50% of sales, and fixed costs of $2.2 million. The firm's tax rate is 30%.
a.What are the effects onthe after-tax profits and cash flow, ifsales increase from $10.4 million to $11.8 million. (amounts as positive values. do not round intermediate calculations. answer in million rounded to 3 decimal places.)
After tax profit: decreased? increased? by $____million??
Cash flowincreased? decreased? by $million.????
b.What are the effects on the after-tax profits and cash flow, ifvariable costs increase to 60% of sales.(amounts as positive values. do not round intermediate calculations. answer in million rounded to 3 decimal places.)
After-tax profitdecreased? increased? by $million???
Cash flow: increased? decreased?by $million???
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