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Nordquist Industries is forecasting the following income statement: Sales $16,000,000 Operating costs excluding depreciation 10,400,000 EBITDA $ 5,600,000 Depreciation 2,000,000 EBIT $ 3,600,000 Interest 1,000,000

Nordquist Industries is forecasting the following income statement:
Sales

$16,000,000

Operating costs excluding depreciation

10,400,000

EBITDA

$ 5,600,000

Depreciation

2,000,000

EBIT

$ 3,600,000

Interest

1,000,000

EBT

$ 2,600,000

Taxes (30%)

780,000

Net income

$ 1,820,000

The CEO would like to see higher sales and a forecasted net income of $2,500,000. 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 30%. What level of sales would generate $2,500,000 in net income?

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