Question

A project currently generate sales of $10.5 million, variable costs equal to 40% of sales, and fixed costs of $2.2 million. The firms tax rate is 35%.

A project currently generates sales of $10.5 million, variable costs equal to 40% of sales, and fixed costs of $2.2 million. The firm's tax rate is 35%. a. What are the effects on the after-tax profits and cash flow, if sales increase from $10.5 million to $12 million. (Input all amounts as positive values. Do not round intermediate calculations. Enter your answers in millions rounded to 3 decimal places.) After-tax profit (Click to select) by $ Cash flow (Click to select) by $ million. million b. What are the effects on the after-tax profits and cash flow, if variable costs increase to 60% of sales. (Input all amounts as positive values. Do not round intermediate calculations. Enter your answers in millions rounded to 3 decimal places.) After-tax profit (Click to select) by $ Cash flow (Click to select) by $ million million

Answer 1

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NPV, IRR, PBP,OCFINDEX - Microsoft Excel (Product Activation Failed) View Add-Ins Formulas Data Review - 2x Σ AutoSum : A 11 A = = = V General A A E Wrap Text FMerce Merge & Center Center E E File Home Insert Page Layout % Cut Calibri Ea Copy Paste B I U - D Format Painter Clipboard Font CF817 - for BY BZ CA s 4.0 .00 8. Insert Delete Format $ - % % Number Conditional Format Formatting as Table Styles Cell Styles Fill 2 Clear Sort & Filter Editing Find & Select Alignment Cells CDCECE CG 799 800 801 802 803 804 805 SALES VARIABLE COSTS FIXED COSTS EBIT INTEREST EBT TAXES AFTER TAX PROFIT PRESENT 10.500 4.200 2.200 4.100 0.000 4.100 1.435 2.665 REVISED 12.000 4.800 2.200 5.000 0.000 5.000 1.750 3.250 806 807 808 809 810 811 812 813 814 815 816 817 AFTER TAX PROFIT INCREAS BY 0.585 MILLION CASH FLOW WILL INCREASE BY 0.585 MILLION (NO CHANGE IN DEPRECIATION, SO BOTH ANSWERS WILL BE SAME] PRESENT 10.500 SALES FCFARM, MSI,confidenceINDEX REVISED 10.500 HEDGING MONEY MARKET H O CURRENCY LOAN CROSS OVER GM HPR AM TAX GROWTH SUST I CF CASH FLOW STATW ferences: EV46 PREF AND DIV POLICY BOU 130% Rea 0 S E O * 10 ENG 21-11-2019

NPV, IRR, PBP,OCFINDEX - Microsoft Excel (Product Activation Failed) View Add-Ins File Home Insert Page Layout Formulas Data Review - 2x % Cut Σ AutoSum : A Calibri 11 A = = = V General A A Wrap Text Merge Merge & Center Center B I U - D SF 4:0 .00 8. Insert Delete Format $ - % % Number Conditional Format Formatting as Table Styles Cell Styles Fill 2 Clear Sort & Filter Editing Find & Select E Copy Paste Format Painter Clipboard CF833 A BY Font Alignment Cells BZ СА СВ CC CD CE CE CG 815 816 817 818 819 820 821 822 823 824 SALES VARIABLE COSTS FIXED COSTS EBIT INTEREST EBT TAXES AFTER TAX PROFIT PRESENT 10.500 4.200 2.200 4.100 0.000 4.100 1.435 2.665 REVISED 10.500 6.300 2.200 2.000 0.000 2.000 0.700 1.300 825 826 827 828 829 830 AFTER TAX PROFIT DECREASE BY 1.365 MILLION CASH FLOW WILL DECREASE BY 1.365 MILLION (NO CHANGE IN DEPRECIATION, SO BOTH ANSWERS WILL BE SAME] 831 832 833 H O FCFARM, MSI,confidenceINDEX CURRENCY LOAN CROSS OVER HEDGING MONEY MARKET GM HPR AM TAX GROWTH SUST I CF CASH FLOW STATW ferences: EV46 PREF AND DIV POLICY BOU 130% Rea 0 . B 9 . * . 40 ENG 21-11-2019