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....

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.)

Req

cash flow                                    by

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.)

Req

cash flow                                    by