A project currently generates sales of $20 million, variable costs equal 50% of sales, and fixed costs are $4.0 million. The firm's tax rate is 35%. Assume all sales and expenses are cash items.
a. What are the effects on cash flow, if sales increase from $20 million to $22.0 million? (Input the amount as positive value. Enter your answer in dollars not in millions.)
Cash flow by
b. What are the effects on cash flow, if variable costs increase to 55% of sales? (Input the amount as positive value. Enter your answer in dollars not in millions.)
Cash Flow by