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INCOME STATEMENT   Pearson Brothers recently reported an EBITDA of $7 5 million and net income of...

INCOME STATEMENT   Pearson Brothers recently reported an EBITDA of $7 5 million and net income of $1 8 million. It had $2 0 million of interest expense, and its corporate tax rate was 40%. What was its charge for depreciation and amortization?

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Answer #1

EBT = $1,800,000 / (1 - 0.40) = $3,000,000

EBITDA = Depreciation + Amortization + Interest + EBT

Depreciation + Amortization = $7,500,000 – $2,000,000 – $3,000,000 = $2,500,000

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