EBITDA $4,950,000 Depreciation and amortization 880,000
EBIT $4,070,000
Interest 1,100,000
EBT $2,970,000
Taxes (25%) 742,500
Net income $2,227,500
The CEO would like to see higher sales and a forecasted net income of $2,900,000. Assume that operating costs (excluding depreciation and amortization) are 55% of sales and that depreciation and amortization and interest expenses will increase by 13%. 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 $2,900,000 in net income? Round your answer to the nearest dollar, if necessary.
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