At the end of last year, Roberts Inc. reported the following income statement (in millions of dollars):

Looking ahead to the following year, the company’s CFO has assembled the following information:

• Year-end sales are expected to be 10 percent higher than the $3 billion in sales generated last year.

• Year-end operating costs, excluding depreciation, are expected to equal 80 percent of year-end sales.

• Depreciation is expected to increase at the same rate as sales.

• Interest costs are expected to remain unchanged.

• The tax rate is expected to remain at 40 percent.

On the basis of this information, what will be the forecast for Roberts’ year-end net income?

Transcribed Image Text:

Sales $3,000 Operating costs excluding depreciation 2,450 $ 550 EBITDA 250 Depreciation $ 300 EBIT Interest 125 $ 175 EBT Taxes (40%) 70 $ 105 Net income