Problem 1

Problem 2

Problem 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. = EBITOperating costs (excl. Deprec.) 6,974,815 $12,681,482 0.55Depreciation 880,000 $800,000 1.10EBIT $ 4,826,667 $4,166,667 + $660,000Interest 660,000 $600,000 1.10EBT $ 4,166,667 $2,500,000/(1 0.4)Taxes (40%) 1,666,667 $4,166,667 0.40Net income $ 2,500,000

Problem 6