Phoenix TV is forecasting the following income statement: Sales Operating costs excluding depr. & amort. EBITDA Depreciation & amortization EBIT Interest EBT Taxes (40%) Net income $8,000,000 4,400,000 $3,600,000 800,000 $2,800,000 600,000 $2,200,000 800,000 $1,320,000 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
Phoenix TV is forecasting the following income statement: Sales Operating costs excluding depr. & amort. EBITDA Depreciation & amortization EBIT Interest EBT Taxes (40%) Net income $8,000,000 4,400,000 $3,600,000 800,000 $2,800,000 600,000 $2,200,000 800,000 $1,320,000 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
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Phoenix TV is forecasting the following income statement:
Sales
Operating costs excluding depr.& amort.
EBITDA
Depreciation & amortization
EBIT
Interest
EBT
Taxes (40%)
Net income
$8,000,000
4,400,000
$3,600,000
800,000
$2,800,000
600,000
$2,200,000
800,000
$1,320,000
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?
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