document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=359118>Question 359118</A>: <I><SPAN STYLE=\"word-break: break-all;\"> Hermann Industries is forecasting the following income statement:\r<BR>\n" );
document.write( "\n" );
document.write( "Sales $10,000,000 <BR>\n" );
document.write( "Operating costs (excluding depreciation and amortization) 5,500,000 <BR>\n" );
document.write( "EBITDA $4,500,000 <BR>\n" );
document.write( "Depreciation and amortization 1,000,000 <BR>\n" );
document.write( "EBIT $3,500,000 <BR>\n" );
document.write( "Interest 500,000 <BR>\n" );
document.write( "EBT $3,000,000 <BR>\n" );
document.write( "Taxes (40%) 1,200,000 <BR>\n" );
document.write( "Net income $1,800,000 \r<BR>\n" );
document.write( "\n" );
document.write( "The CEO would like to see higher sales and a forecasted net income of $2,430,000.\r<BR>\n" );
document.write( "\n" );
document.write( "Assume that operating costs (excluding depreciation and amortization) are 55% of sales, and 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 $2,430,000 in net income? If necessary, round your answer to the nearest dollar at the end of the calculations.\r<BR>\n" );
document.write( "\n" );
document.write( " \r<BR>\n" );
document.write( "\n" );
document.write( " </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #256287 by </B><A HREF=/tutors/aboutme.mpl?userid=solver91311><B>solver91311(24713)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=solver91311><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=solver91311><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=256287\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> <font face=\"Garamond\" size=\"+2\">\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "<IMG STYLE=\"max-width:80%;\" SRC=\"/cgi-bin/rendertex.cgi?\LARGE \ \ \ \ \ \ \ \ \ \ \text{EBITDA}\ =\ 0.45*\text{Sales}\">\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "<IMG STYLE=\"max-width:80%;\" SRC=\"/cgi-bin/rendertex.cgi?\LARGE \ \ \ \ \ \ \ \ \ \ \text{EBIT}\ =\ \text{EBITDA}\ - \text{D&A}\">\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "D&A was $1M, but increased 10%, so is now $1.1M, hence:\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "<IMG STYLE=\"max-width:80%;\" SRC=\"/cgi-bin/rendertex.cgi?\LARGE \ \ \ \ \ \ \ \ \ \ \text{EBIT}\ =\ 0.45*\text{Sales}\ -\ 1,100,000\">\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "<IMG STYLE=\"max-width:80%;\" SRC=\"/cgi-bin/rendertex.cgi?\LARGE \ \ \ \ \ \ \ \ \ \ \text{EBT}\ =\ \text{EBIT}\ -\ \text{Interest}\">\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "Interest was $0.5M, but increased 10% so is now $0.55M, hence:\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "<IMG STYLE=\"max-width:80%;\" SRC=\"/cgi-bin/rendertex.cgi?\LARGE \ \ \ \ \ \ \ \ \ \ \text{EBT}\ =\ 0.45*\text{Sales}\ -\ 1,650,000\">\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "<IMG STYLE=\"max-width:80%;\" SRC=\"/cgi-bin/rendertex.cgi?\LARGE \ \ \ \ \ \ \ \ \ \ \text{Net Income}\ =\ 0.60*\text{EBT}\">\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "<IMG STYLE=\"max-width:80%;\" SRC=\"/cgi-bin/rendertex.cgi?\LARGE \ \ \ \ \ \ \ \ \ \ \text{Net Income}\ =\ 0.60*(0.45*\text{Sales}\ -\ 1,650,000)\">\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "Now solve for Sales as a function of Net Income (NI):\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "<IMG STYLE=\"max-width:80%;\" SRC=\"/cgi-bin/rendertex.cgi?\LARGE \ \ \ \ \ \ \ \ \ \ \ 0.60*(0.45*\text{Sales}\ -\ 1,650,000)\ = \text{NI}\">\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "<IMG STYLE=\"max-width:80%;\" SRC=\"/cgi-bin/rendertex.cgi?\LARGE \ \ \ \ \ \ \ \ \ \ \ 0.45*\text{Sales}\ -\ 1,650,000\ = \frac{\text{NI}}{0.6}\">\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "<IMG STYLE=\"max-width:80%;\" SRC=\"/cgi-bin/rendertex.cgi?\LARGE \ \ \ \ \ \ \ \ \ \ \ 0.45*\text{Sales}\ = \frac{\text{NI}}{0.6}\ +\ 1,650,000\">\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "<IMG STYLE=\"max-width:80%;\" SRC=\"/cgi-bin/rendertex.cgi?\LARGE \ \ \ \ \ \ \ \ \ \ \ \text{Sales}\ = \frac{\frac{\text{NI}}{0.6}\ +\ 1,650,000}{0.45\">\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "Don't forget to round your answer.<BR>\n" );
document.write( " \r<BR>\n" );
document.write( "\n" );
document.write( "John<BR>\n" );
document.write( "<IMG STYLE=\"max-width:80%;\" SRC=\"/cgi-bin/rendertex.cgi?\LARGE e^{i\pi} + 1 = 0\"><BR>\n" );
document.write( "My calculator said it, I believe it, that settles it<BR>\n" );
document.write( "<div  DISABLED_style= \"text-align:center\"><a  rel=nofollow HREF=\"http://outcampaign.org/\" target=\"_blank\"><IMG STYLE=\"max-width:80%;\" src=\"http://cdn.cloudfiles.mosso.com/c116811/scarlet_A.png\" border=\"0\" alt=\"The Out Campaign: Scarlet Letter of Atheism\" width=\"143\" height=\"122\" /></a></div><BR>\n" );
document.write( "</font> </SPAN>\n" );
document.write( "</TD></TR></TABLE>\n" );