A project currently generates sales of $11.4 million, variable costs equal to 50% of sales, and fixed costs of $3.2 million. The firms tax rate is 20%.

a. What are the effects on the after-tax profits and cash flow, if sales increase from $11.4 million to $13.5 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 increased/decreased by $_______ million.

Cash flow increased/decreased 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 increased/decreased by $________ million.

Cash flow increased/decreased by $________ million.