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A project currently generates sales of $20 million, variable costs equal 50% of sales, and fixed...

A project currently generates sales of $20 million, variable costs equal 50% of sales, and fixed costs are $4.0 million. The firm’s tax rate is 35%. Assume all sales and expenses are cash items.

a. What are the effects on cash flow, if sales increase from $20 million to $22.0 million? (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? (Input the amount as positive value. Enter your answer in dollars not in millions.)

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