A project currently generates sales of $11.4 million, variable costs equal to 50

Question

A project currently generates sales of $11.4 million, variable costs equal to 50% of sales, and fixed costs of $3.4 million. The firm’s tax rate is 30%.

What are the effects on the after-tax profits and cash flow, if sales increase from $11.4 million to $12.8 million. (Input all amounts as positive values. Do not round intermediate calculations. Enter your answers in millions rounded to 3 decimal places.)

What are the effects on the after-tax profits and cash flow, if variable costs increase to 70% of sales.(Input all amounts as positive values. Do not round intermediate calculations. Enter your answers in millions rounded to 3 decimal places.)

A project currently generates sales of $11.4 million, variable costs equal to 50% of sales, and fixed costs of $3.4 million. The firm’s tax rate is 30%.

Explanation / Answer

A project currently generates sales of $11.4 million, variable costs equal to 50

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