Income Statement: Herman Industries isforecasting the following income statement:
- Sales $8,000,000
- Operating costs excluding depr. & amort. 4,400,00
- 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 netincome of $2,500,000. Assume that operating costs (excludingdepreciation and amortization) are 55% of sales and thatdepreciation and amortization and interest expenses will increaseby 10%. The tax rate, which is 40%, will remain thesame. What level of sales would generate $2,500,000 in netincome?