Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A project currently generates sales of $12.5 million, variable costs equal to 40% of sales, and fixed costs of $3.9 million. The firms tax rate

A project currently generates sales of $12.5 million, variable costs equal to 40% of sales, and fixed costs of $3.9 million. The firms tax rate is 20%. a. What are the effects on the after-tax profits and cash flow, if sales increase from $12.5 million to $13.2 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 by $ million. Cash flow by $ million. b. What are the effects on the after-tax profits and cash flow, if variable costs increase to 50% 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 by $ million. Cash flow by $ million.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advanced Accounting

Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik

10th edition

0-07-794127-6, 978-0-07-79412, 978-0077431808

Students also viewed these Finance questions