Question
Nordquist Industries is forecasting the following income statement: Sales $15,000,000 Operating costs excluding depreciation 9,750,000 EBITDA $ 5,250,000 Depreciation 1,500,000 EBIT $ 3,750,000 Interest 1,500,000
Nordquist Industries is forecasting the following income statement:
Sales $15,000,000 Operating costs excluding depreciation 9,750,000 EBITDA $ 5,250,000 Depreciation 1,500,000 EBIT $ 3,750,000 Interest 1,500,000 EBT $ 2,250,000 Taxes (35%) 787,500 Net income $ 1,462,500
The CEO would like to see higher sales and a forecasted net income of $3,000,000. Assume that operating costs (excluding depreciation) are 65% of sales and that depreciation and interest expenses will increase by 20%. The tax rate will remain at 35%. What level of sales would generate $3,000,000 in net income?
a. $23,472,527 b. $16,960,712 c. $29,010,989 d. $16,537,500 e. $17,137,500
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