Question
A project currently generates sales of $8.5 million, variable costs equal to 33% of sales, and fixed costs of $1.5 million. The firm's tax
A project currently generates sales of $8.5 million, variable costs equal to 33% of sales, and fixed costs of $1.5 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 $8.5 million to $10.5 million. After-tax profits After-tax cash flow by by Increase/decrease? Increase/decrease? million. million. b. Variable costs increase to 41% of sales. After-tax profits After-tax cash flow Increase/decrease? Increase/decrease? by by million. million.
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Fundamentals of Corporate Finance
Authors: Richard Brealey, Stewart Myers, Alan Marcus, Devashis Mitra, Elizabeth Maynes, William Lim
6th Canadian edition
1259024962, 978-1259024962
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