Patterson Brothers recently reported an EBITDA of $19.5 million and net income of $3.9 million. It...

Patterson Brothers recently reported an EBITDA of $19.5 million and net income of $3.9 million. It had $1.5 million of interest expense, and its corporate tax rate was 25%. What was its charge for depreciation and amortization? Write out your answer completely. For example, 25 million should be entered as 25,000,000. Do not round intermediate calculations. Round your answer to the nearest dollar, if necessary.

Expert Solution

Assuming Depreciation as 'x':

	$
EBITDA	1,95,00,000
Less: Depreciation	x
EBIT	(19500000 - x)
Less: Interest	15,00,000
EBT	(19500000 - x - 1500000)
Less: Tax Expense @ 25%	*(19500000 - x - 1500000) 25%**
Net Income	39,00,000

		$
(19500000 - x - 1500000) * 75%	=>	39,00,000
(18000000 - x) * 75%	=>	39,00,000
(18000000 - x)	=>	=3900000 / 75%
(18000000 - x)	=>	52,00,000
- x	=>	=5200000-18000000
- x	=>	-1,28,00,000
x	=>	1,28,00,000

jeff jeffy answered 1 year ago

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