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Swann Systems has forecast this income statement for the upcoming year: Sales $5,000,000 Operating Costs (excluding depr and amort) $ 3,000,000 EBITDA $2,000,000 Depreciation and
Swann Systems has forecast this income statement for the upcoming year: Sales $5,000,000 Operating Costs (excluding depr and amort) $ 3,000,000 EBITDA $2,000,000 Depreciation and amortization $500,000 EBIT $1,500,000 Interest $500,000 EBT $1,000,000 Taxes (40%) $400,000 Net income $600,000 The company's president is unsatisfied with the forecast and wants to see higher sales and a forecasted net income of $2,000,000. Assume that operating costs are always 60% of sales, and that depreciation and amortization, interest expense, and the company's tax rate (40%), will remain the same even if sales change. How much in sales would Swann have to obtain to generate $2,000,000 in net income? a. $5,800,000 b. $6,000,000 c. $7,200,000 d. $8,300,000 e. $10,833,333
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