Question
A project currently generates sales of $19 million, variable costs equal 40% of sales, and fixed costs are $3.8 million. The firm's tax rate is
A project currently generates sales of $19 million, variable costs equal 40% of sales, and fixed costs are $3.8 million. The firm's tax rate is 35%. Assume all sales and expenses are cash items.
a.What are the effects on cash flow, ifsales increase from $19 million to $20.9 million?(Input the amount as positive value. Enter your answer in dollars not in millions.)
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.)
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.)
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