Question

The CEO would like to see higher sales and a forecasted net income of $2,500,000. Assume that operating costs (excluding depreciation and amortization) are 55% of sales and that depreciation and amortization and interest expenses will increase by 10%. The tax rate, which is 40%, will remain the same. What level of sales would generate $2,500,000 in net income?

Answer 1

The answer is $11.904.762

There an assumption about Depreciation, Amortization and Interest, it says increase by 10% over which there is no data to calculate,so It's used 10% of sales.

Step-by-step explanation:

Income Statement

Sales $11.904.762

Cost of goods sold -$6.547.619

Gross Profit $5.357.143

depreciation, amortization and Interest -$1.190.476

Net Income BEFORE Taxes $4.166.667

Tax RATE 40% -$1.666.667

Net Income after Taxes $2.500.000