Patterson brothers recently reported an ebitda of $11.5 million and net income of $3.3 million. it had $2.0 million of interest expense, and its corporate tax rate was 40%. what was its charge for depreciation and amortization?

Explanation:

The P&L structure is:

(+)Earnings

(-)Cost

Gross Income

(-)Administrative expenditures

Earnings before interests, taxes, depreciation and amortization (EBITDA)

(-)Depreciation and amortization

Earnings before interests and taxes (EBIT)

(+) No- operational earnings

(-) No- operational expenditures

Earnings before taxes (EBT)

(-)Taxes

Net income

Then, to find the depreation and amortization expenditure you must:

First, find earnings before taxes (EBT):

EBT- EBT*40% = 3.3 million

EBT(1-40%)= 3.3 million

EBT= 3.3/60%

EBT= 5.5 million

Interest expenses are no- operational expenditures. Since there are not no- operational earnings, then:

EBIT= EBT+interest expenses

EBIT= 5.5+ 2

EBIT= 7.5 million

Finally, the depreciation and amortization expenditure is the difference between EBIT and EBITDA:

Depreciation and amortization= 11.5-7.5

D&A= 4 million

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i hope this you! : )

the investment was $14,174.196

explanation:

a lump sum means that the father of the example made one deposit and leave it be.

we need to know the value of a capital that generated at 4.05% per year during 28 years the sum of $48,613.24

now clearing the formula to solve for capital we got:

and we reach the answer investment = $14,174.20