A project currently generates sales of $19 million, variable costs equal 40% of sales, and fixed costs are $3.8 million. The firms tax rate is 35%. Assume all sales and expenses are cash items.

a.

What are the effects on cash flow, if sales increase from $19 million to $20.9 million? (Input the amount as positive value. Enter your answer in dollars not in millions.)

Cash flow (Click to select) increases decreases by $ ???

b.

What are the effects on cash flow, if variable costs increase to 50% of sales? (Input the amount as positive value. Enter your answer in dollars not in millions.)

Cash flow (Click to select) increases decreases by $ ???