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Sunland Corporation recently reported an EBITDA of $31.80 million and net income of $9.7 million. The company had $6.8 million in interest expense, and it's average corporate tax rate was 35 percent. What was its depreciation and amortization expense? (Round answer to 2 decimal places and enter your answer in dollars, e.g. 9,700,000.25)

Respuesta :

Parrain

Answer: $10.08 million

Explanation:

Net Income = Earnings before Interest, tax , depreciation and amortization - Interest - tax - depreciation and amortization

Tax is paid after everything is paid so it is the last deduction before net income.

Post tax income = Pretax income * ( 1 - T)

Pretax Income = Post tax income / ( 1 - T)

= 9.7/ ( 1 - 0.35)

= $14.92 million

Tax = 14.92 - 9.7

= $5.22 million

Net Income = Earnings before Interest, tax , depreciation and amortization - Interest - tax - depreciation and amortization

9.7 = 31.80 - 6.8 - 5.22 - depreciation and amortization

Depreciation and Amortization =  31.80 - 6.8 - 5.22 - 9.7

Depreciation and Amortization = $10.08‬ million

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