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# Fi_1 - B \$ 6,000,000 C \$ 7,200,000 D \$10,833,333 E \$...

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10.  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. Assume that operating costs are always 60% of sales, and that depreciation and amortization, interest expense, and the company's tax rate (40%), 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

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Unformatted text preview: B) \$ 6,000,000 C) \$ 7,200,000 D) \$10,833,333 E) \$ 8,300,000 Points Earned: 5.0/5.0 Correct Answer(s): D 11. Garfield Inc. is expanding throughout the Southeast United States, and it expects sales to increase by \$1 million and operating costs (excluding depr and amort) by \$700,000. Depreciation and amortization expenses will rise by \$50,000 and interest expense by \$150,000, while the company's tax rate will remain at 40%. If the company's forecast is correct, how much will net income change, as a result of the expansion? A) \$180,000 increase B) \$ 40,000 increase C) \$100,000 increase D) \$ 60,000 increase E) No change Points Earned: 0.0/5.0 Correct Answer(s): D...
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