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A project currently generates sales of $5.2 million, variable costs equal to 53% of sales, and fixed costs of $1.1 million. The firm's tax rate
A project currently generates sales of $5.2 million, variable costs equal to 53% of sales, and fixed costs of $1.1 million. The firm's tax rate is 35%. What are the effects of the following changes on after-tax profits and cash flows? | ||
a. | Sales increase from $5.2 million to $6.2 million. What are the effects on after-tax profits and cash flows?(Round your answers to 3 decimal places. Enter your answers in millions of dollars.) | |
After-tax profits increase by ------------ million. | ||
After-tax cash flow increase by ------------ million. | ||
b. | Variable costs increase to 63% of sales. What are the effects on after-tax profits and cash flows? (Round your answers to 3 decimal places. Enter your answers in millions of dollars.) | |
After-tax profits decrease by ---------- million. | ||
After-tax cash flow decrease by ------------ million. |
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