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A project currently generates sales of $11.8 million, variable costs equal to 50% of sales, and fixed costs of $4 million. The firm’s tax rate is 35%.
a. What are the effects on the after-tax profits and cash flow, if sales increase from $11.8 million to $13.2 million. (Input all amounts as positive values. Do not round intermediate calculations. Enter your answers in millions rounded to 3 decimal places.)
After-tax profit (Click to select) increased decreased by $ million.Cash flow (Click to select) decreased increased by $ million.b. What are the effects on the after-tax profits and cash flow, if variable costs increase to 60% of sales. (Input all amounts as positive values. Do not round intermediate calculations. Enter your answers in millions rounded to 3 decimal places.)
After-tax profit (Click to select) increased decreased by $ million.Cash flow (Click to select) increased decreased by $ million.
 
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