Answered step by step
Verified Expert Solution
Question
1 Approved Answer
A project currently generates sales of $15 million, variable costs equal 60% of sales, and fixed costs are $3.0 million. The firm's tax rate is
A project currently generates sales of $15 million, variable costs equal 60% of sales, and fixed costs are $3.0 million. The firm's tax rate is 30%. Assume all sales and expenses are cash items. a. What are the effects on cash flow, if sales increase from $15 million to $16.5 million? (Input the amount as positive value. Enter your answer in dollars not in millions.) Answer is complete but not entirely correct. Cash flow increases by $ 5 b. What are the effects on cash flow, if variable costs increase to 65% of sales? (Input the amount as positive value. Enter your answer in dollars not in millions.) Answer is comnlete hut not entirely correct b. What are the effects on cash flow, if variable costs increase to 65% of sales? (Input the amount as positive value. Enter your answer in dollars not in millions.) Answer is complete but not entirely correct. Cash flow decreases by $ 2X
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started