Hermann Industries is forecasting the following income statement:
Sales $8,000,000
operating costs excluding depreciationand amortization $4,400,000
EBITDA $3,600,000
Depreciation and amortization 800,000
EBIT $2,800,000
Interest 600,000
EBT $2,200,000
Taxes(40%) 880,000
Net Income $1,320,000
The CEO would like to see higher sales and a forecasted netincome of $2,500,000.
Assume that operating costs(excluding depreciation andamortization) are 55 percent of sales, and depreciation andamortization and interest expenses will increase by 10 percent. Thetax rate, which is 40 percent, will remain the same. What level ofsales would generate $2,500,000 in net income?