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What are the effects on cash flow

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Reference no: EM132746969

Question - A project currently generates sales of $18 million, variable costs equal 60% of sales, and fixed costs are $3.6 million. The firm's tax rate is 35%. Assume all sales and expenses are cash items.

Required -

a. What are the effects on cash flow, if sales increase from $18 million to $19.8 million?

b. What are the effects on cash flow, if variable costs increase to 70% of sales?

Reference no: EM132746969

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