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QUESTION

Below is the 2017 income statement for Engage Inc., in thousands of dollars, for 2017. Assume that Engage has no debt. The CEO would like net income...

Below is the 2017 income statement for Engage Inc., in thousands of dollars, for 2017.

Assume that Engage has no debt. The CEO would like net income to be $3.1m in 2018. If operating costs are 35% of sales, general and administrative costs will increase by $100k, and that depreciation and amortization expense decrease by 10%, how high will sales have to be to hit the CEO's net income target? Note that Engage will enter a 40% marginal tax bracket when its net income is above $2m. 

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