A project currently generates sales of $11.5 million, variable costs equal to 40% of sales, and fixed costs of $3.5 million. The firm’s tax rate is 35%.
What are the effects on the after-tax profits and cash flow, if sales increase from $11.5 million to $12.5 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 (decrease/increase) by:
Cash flow (decrease/increase) by:
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 (decrease/increase) by:
Cash flow (decrease/increase) by: