Income Statement
Edmonds Industries is forecasting the following income statement:
|
Sales
|
$11,000,000
|
|
Operating costs excluding depreciation & amortization
|
6,050,000
|
|
EBITDA
|
$4,950,000
|
|
Depreciation and amortization
|
1,650,000
|
|
EBIT
|
$3,300,000
|
|
Interest
|
550,000
|
|
EBT
|
$2,750,000
|
|
Taxes (40%)
|
1,100,000
|
|
Net income
|
$1,650,000
|
The CEO would like to see higher sales and a forecasted net income of $2,392,500. 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 $2,392,500 in net income? If necessary, round your answer to the nearest dollar at the end of the calculations.