Use AstroTurf Company’s income statement below to answer the following two questions.
a. Calculate AstroTurf’s EBITDA.b. Determine what level of sales would generate $3.3m in net income for the following year (Year 2), knowing that operating costs (excl. depreciation and amortization) will increase by 5%. The tax rate will not change.
Year 1 Income Statement:Sales: $11mOperating costs (excl. depreciations & amortization): $4.5mDepreciation and amortization: $1.5mInterest: $0.7mNet Income: $2.8mTax Rate: 35%