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A project currently generates sales of $17 million, variable costs equal 40% of sales, and fixed costs are $3.4 million. The firm's tax rate is 30%.

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A project currently generates sales of $17 million, variable costs equal 40% of sales, and fixed costs are $3.4 million. The firm's tax rate is 30%. Assume all sales and expenses are cash items.

 

a. What are the effects on cash flow, if sales increase from $17 million to $18.7 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 45% of sales? (Input the amount as positive value. Enter your answer in dollars not in millions.)

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