Question
Edmonds Industries is forecasting the following income statement: Sales $12,000,000 Operating costs excluding depreciation & amortization 6,600,000 EBITDA $5,400,000 Depreciation and amortization 1,560,000 EBIT $3,840,000
Edmonds Industries is forecasting the following income statement:
Sales | $12,000,000 |
Operating costs excluding depreciation & amortization | 6,600,000 |
EBITDA | $5,400,000 |
Depreciation and amortization | 1,560,000 |
EBIT | $3,840,000 |
Interest | 600,000 |
EBT | $3,240,000 |
Taxes (40%) | 1,296,000 |
Net income | $1,944,000 |
The CEO would like to see higher sales and a forecasted net income of $3,790,800. Assume that operating costs (excluding depreciation and amortization) are 55% of sales and that depreciation and amortization and interest expenses will increase by 8%. The tax rate, which is 40%, will remain the same. (Note that while the tax rate remains constant, the taxes paid will change.) What level of sales would generate $3,790,800 in net income? Round your answer to the nearest dollar, if necessary.
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