eBook Problem Walk-Through

INCOME STATEMENT

Edmonds Industries is forecasting the following income statement:

Sales	$4,000,000
Operating costs excluding depreciation & amortization	2,200,000
EBITDA	$1,800,000
Depreciation and amortization	440,000
EBIT	$1,360,000
Interest	200,000
EBT	$1,160,000
Taxes (40%)	464,000
Net income	$696,000

The CEO would like to see higher sales and a forecasted net income of $1,357,200. 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 40%, will remain the same. (Note that while the tax rate remains constant, the taxes paid will change.) What level of sales would generate $1,357,200 in net income? If necessary, round your answer to the nearest dollar at the end of the calculations. $

Could you show the problem worked out.