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What are the effects on cash flow

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Problem - A project currently generates sales of $5 million, variable costs equal 50% of sales, and fixed costs are $1.0 million. The firm's tax rate is 40%. Assume all sales and expenses are cash items.

a. What are the effects on cash flow, if sales increase from $5 million to $5.5 million?

b. What are the effects on cash flow, if variable costs increase to 55% of sales?

Reference no: EM132831696

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