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Hermann Industries is forecasting the following information: Sales $8,000,000 Operating costs excluding D&A. 4,400,000 > EBITDA $3,600,000 > Depreciation & amortization 800,000 EBIT $2,800,000

 

Hermann Industries is forecasting the following information: Sales $8,000,000 Operating costs excluding D&A. 4,400,000 > EBITDA $3,600,000 > Depreciation & amortization 800,000 EBIT $2,800,000 > Interest 600,000 > EBT $2,200,000 > Taxes (40%) 880,000 Net income $1,320,000 The CEO would like to see higher sales and a forecasted net income of $3,300,000. Assume that operating costs (excluding depreciation and amortization) are 60% of sales and that depreciation and amortization and interest expenses will increase by 10% and 15% respectively. The tax rate, which is 40%, will remain the same. What level of sales would generate $3,300,000 in net income?

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