Edmonds Industries is forecasting the following income statement:

The CEO would like to see higher sales and a forecasted net income of $3,000,000. Assume that operating costs (excluding depreciation and amortization) are 55% of sales and that depreciation and amortization and interest expenses will increase by 6%. 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 $3,000,000 in net income?

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Sales Operating costs excluding depreciation and amortization EBITDA Depreciation and amortization EBIT Interest EBT Taxes (25%) Net income $10,000,000 5,500,000 $ 4,500,000 1,200,000 $ 3,300,000 500,000 $ 2,800,000 700,000 $ 2,100,000