A project currently generates sales of $10.8 million, variable costs equal to 50% of sales, and fixed costs of $2.9 million. The firms tax rate is 35%.

a.	What are the effects on the after-tax profits and cash flow, if sales increase from $10.8 million to $12 million. (Input all amounts as positive values. Do not round intermediate calculations. Enter your answers in millions rounded to 3 decimal places.)

After-tax profit (Click to select)increaseddecreased by $ million.

Cash flow (Click to select)decreasedincreased by $ million.

b.	What are the effects on the after-tax profits and cash flow, if variable costs increase to 60% of sales.(Input all amounts as positive values. Do not round intermediate calculations. Enter your answers in millions rounded to 3 decimal places.)

After-tax profit (Click to select)decreasedincreased by $ million.

Cash flow (Click to select)increaseddecreased by $ million.