What level of sales would generate in net income

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Edmonds Industries is forecasting the following income statement:

Sales $12,000,000

Operating costs excluding depreciation & amortization 6,600,000

EBITDA $5,400,000

Depreciation and amortization 960,000

EBIT $4,440,000

Interest 600,000

EBT $3,840,000

Taxes (25%) 960,000

Net income $2,880,000

Problem 1: The CEO would like to see higher sales and a forecasted net income of $3,770,000. Assume that operating costs (excluding depreciation and amortization) are 55% of sales and that depreciation and amortization and interest expenses will increase by 11%. The tax rate, which is 25%, will remain the same. (Note that while the tax rate remains constant, the taxes paid will change.) What level of sales would generate $3,770,000 in net income? Round your answer to the nearest dollar, if necessary.

Reference no: EM132982529

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