Question: A project currently generates sales of $ 5 million, variable costs equal 5 0 % of sales, and fixed costs are $ 1 . 0

A project currently generates sales of $5 million, variable costs equal 50% of sales, and fixed costs are $1.0 million. The firm's tax rate
is 21%. Assume all sales and expenses are cash items.
a. What are the effects on cash flow, if sales increase from $5 million to $5.5 million?
Note: 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 55% of sales?
Note: Input the amount as positive value. Enter your answer in dollars not in millions.
Answer is complete but not entirely correct.
A project currently generates sales of $5 million, variable costs equal

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