Question

Crane Corporation recently reported an EBITDA of $29.60 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?

Answer 1

Answer:

$7.88 million

Explanation:

Net Income = (EBITDA- Interest - Dep)*(1-tax)

Net income = 9.7

Earnings before interest, taxes, depreciation and amortization; EBITDA = 29.60

Interest = 6.8

tax = 35% or 0.35

9.7 = (29.60 - 6.8 - Dep)(1-0.35)

9.7 = (22.8 - Dep)*0.65

Divide both sides by 0.65

9.7/0.65 = 22.8- dep

14.9231 = 22.8 -dep

Dep = 22.8 - 14.9231

Dep = 7.8769

Therefore, depreciation and amortization expense is $7.88 million