Question

In: Finance

Cox Corporation recently reported an EBITDA of $61 million and $10 million of net income.

Cox Corporation recently reported an EBITDA of $61 million and $10 million of net income. The company has $15 million interest expense and the corporate tax rate is 40.0% percent. What was the company's depreciation and amortization expense? (Answers are in $ millions.)

$56.00

$46.00

$51.00

$36.00

$29.33

Expert Solution

Earnings before tax

Earnings before tax = Net Income / (1 - Tax rate)

= $10 Million / (1 – 0.40)

= $10 Million / 0.60

= $16.67 Million

Earnings before interest and tax

Earnings before interest and tax = Earnings before tax + Interest expenses

= $16.67 Million + $15 Million

= $31.67 Million

Company's depreciation and amortization expense

Company's depreciation and amortization expense = Earnings before interest, tax depreciation & amortization - Earnings before interest and tax

= $61.00 Million - $31.67 Million

= $29.33 Million

“Hence, the Company's depreciation and amortization expense will be $29.33 Million”

Earnings before tax

Earnings before tax = Net Income / (1 - Tax rate)

= $10 Million / (1 – 0.40)

= $10 Million / 0.60

= $16.67 Million

Earnings before interest and tax

Earnings before interest and tax = Earnings before tax + Interest expenses

= $16.67 Million + $15 Million

= $31.67 Million

Company's depreciation and amortization expense

Company's depreciation and amortization expense = Earnings before interest, tax depreciation & amortization - Earnings before interest and tax

= $61.00 Million - $31.67 Million

= $29.33 Million

“Hence, the Company's depreciation and amortization expense will be $29.33 Million”

jeff jeffy answered 3 years ago

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