Question
3. Mehran Enterprise is forecasting the following income statement for the upcoming year: Sales $3,175,000 Operating Costs (excluding depreciation) 1,905,000 Depreciation 290,000 EBIT $ 980,000
3. Mehran Enterprise is forecasting the following income statement for the upcoming year: Sales $3,175,000 Operating Costs (excluding depreciation) 1,905,000 Depreciation 290,000 EBIT $ 980,000 Interest 243,196 EBT $ 736,804 Taxes (25%) 184,201 Net Income $ 552,603 Assume that operating costs (excluding depreciation) are always 60% of sales. Also assume that depreciation, interest expense, and the companys tax rate of 25% (not total taxes paid), will remain the same, even if sales change. The companys president is disappointed with the forecast and would like to see Mehran generate higher sales and a forecasted net income of $1,500,000. What level of sales would Mehran have to obtain to generate $1,500,000 in net income? a. $2,000,000 b. $2,243,196 c. $3,799,794 d. $5,467,996 e. $6,332,990
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