Question

Carla Vista Corporation recently reported an EBITDA of $30.70 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)

Answer 1

Answer:

$8,976,923.08

Explanation:

The computation of the  depreciation and amortization expense is shown below:

= EBITDA - EBIT

where,

EBITDA $30,700,000        

Now the EBIT = EBT + Interest

where,

EBT = (Net income) ÷ (1 - tax rate)

       = ($9.7 million) ÷ (1 - 0.35)

       = $14,923,076.92

And, the interest is $6,800,000

So, EBIT = $14,923,076.92 + $6,800,000 = $21,723,076.92

So, the depreciation and amortization expense  is

= $30,700,000 - $21,723,076.92

= $8,976,923.08