The document discusses calculating financial metrics like sales, operating costs, depreciation, EBIT, interest, EBT, taxes, and net income for a company based on a new sales level of $12,681,482. It estimates operating costs as 55% of sales, depreciation as 10% higher than last year at $880,000, interest as 10% higher than last year at $660,000, taxes at 40% of EBT, and solves for a net income of $2,500,000.

1. Problem 1
Problem 2

2. Problem 3

3. Problem 4
3-8 Working up the income statement you can calculate the new sales level would be
$12,681,482.
Sales $12,681,482 S – 0.45S – Deprec.
= EBIT
Operating costs (excl. Deprec.) 6,974,815 $12,681,482  0.55
Depreciation 880,000 $800,000  1.10
EBIT $ 4,826,667 $4,166,667 +
$660,000
Interest 660,000 $600,000  1.10
EBT $ 4,166,667 $2,500,000/(1 
0.4)
Taxes (40%) 1,666,667 $4,166,667  0.40
Net income $ 2,500,000
Problem 6