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## Finance

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problem: Swann Systems has forecast this income statement for the upcoming year:

 Sales \$5,000,000 Operating costs (excluding depr and amort) 3,000,000 EBITDA \$2,000,000 Depreciation and amortization 500,000 EBIT \$1,500,000 Interest 500,000 EBT \$1,000,000 Taxes (40%) 400,000 Net income \$600,000

The company's president is unsatisfied with the forecast and wants to see higher sales and a forecasted net income of \$2,000,000.

Suppose that operating costs are always sixty percent of sales, & that depreciation and amortization, interest expense, and the company's tax rate [40 percent], will remain the same even if sales change.  How much in sales would Swann have to obtain to generate \$2,000,000 in net income?

[A]      \$ 5,800,000

[B]      \$ 6,000,000

[C]      \$ 7,200,000

[D]      \$ 8,300,000

[E]      \$10,833,333

Basic Finance, Finance

• Category:- Basic Finance
• Reference No.:- M916163

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