A project currently generates sales of $5.3 million, variable costs equal to 50% of sales, and fixed costs of $2.1 million. The firm's tax rate is 35% What are the effects of the following changes on after-tax profits and cash flows? a. Sales increase from $5.3 million to $8.3 million (Round your answers to 3 decimal places. Enter your answers in millions of dollars) After-tax profits After-tax cash flow by by After tax profits After-tax cash flow million million b. Variable costs increase to 59% of sales (Round your answers to 3 decimal places. Enter your answers in millions of dollars.) million million

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Problem 10-3 Sensitivity Analysis (LO2)
A project currently generates sales of $5.3 million, variable costs equal to 50% of sales, and fixed costs of $2.1 million. The firm's tax
rate is 35% What are the effects of the following changes on after-tax profits and cash flows?
a. Sales increase from $5.3 million to $8.3 million (Round your answers to 3 decimal places. Enter your answers in millions
of dollars)
After-tax profits
After-tax cash flow
by
by
After tax profits
After-tax cash flow
b. Variable costs increase to 59% of sales (Round your answers to 3 decimal places. Enter your answers in millions of dollars.)
milion
million
bry
by
million
million
Transcribed Image Text:Problem 10-3 Sensitivity Analysis (LO2) A project currently generates sales of $5.3 million, variable costs equal to 50% of sales, and fixed costs of $2.1 million. The firm's tax rate is 35% What are the effects of the following changes on after-tax profits and cash flows? a. Sales increase from $5.3 million to $8.3 million (Round your answers to 3 decimal places. Enter your answers in millions of dollars) After-tax profits After-tax cash flow by by After tax profits After-tax cash flow b. Variable costs increase to 59% of sales (Round your answers to 3 decimal places. Enter your answers in millions of dollars.) milion million bry by million million
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