a. The after tax profits change by
Sales : $11,400,000 a. $12,80,0000 b. $11,400,000
Variable costs : $57,00,000 $6,40,0000 $7,980,000
Fixed costs : $34,00,000 $34,00,000 $34,00,000
Pre- tax profit : $23,00,000 $30,00,000 $20,000
Taxes : $69,0000 $900,000 $6,000
After tax profit : $1,61,0000 $21,00,000 $14,000
a. So, the after tax profits and the cash flow increase by $49,0000 which is 0.49 million . Since, depreciation is not affected, the after tax profits and the cash flows increase by the same amounts.
b. The after tax profits and the cash flow decrease by $15,96,000, which is 1.596 millions.
A project currently generates sales of $11.4 million, variable costs equal to 50% of sales, and...
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