Question

The company recently reported an EBITDA of $22.5 million and $5.4 million of net income. The company has $6 million interest expense and the corporate tax rate is 40 percent. What was the company’s depreciation and amortization expense?

Answer 1

Depreciation and amortization is $7.5 million

Step-by-step explanation:

If the tax rate is 40%, then the net income is 60%

tax expense=net income*tax rate/60%=$5.4 million/60%*40%=$3.6 million

Depreciation and amortization=EBITDA-tax-interest-net income

EBITDA is $22.5 million

interest is $6 million

net income is $5.4 million

Depreciation and amortization=$22.5 milion-$6 million-$3.6 million-$5.4 million

Depreciation and amortization=$7.5 million