What are the effects on cash flow

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Reference no: EM131903922

A project currently generates sales of $21 million, variable costs equal 50% of sales, and fixed costs are $4.2 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 $21 million to $23.1 million? (Input the amount as positive value. Enter your answer in dollars not in millions.)

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.)

Reference no: EM131903922

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