Question

Talbot Enterprises recently reported an EBITDA of $6.5 million and net income of $1.95 million. It had $1.625 million of interest expense, and its corporate tax rate was 35%. What was its charge for depreciation and amortization? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as 1,200,000. $

Answer 1

Answer: 1.375M

Explanation: We need to follow follwing steps :-

$step 1 : EBT=\:\frac{1.95}{\left ( 1-0.35 \right )}=3$

step 2 : EBIT = EBT + INT

           : EBIT = 3M +1.625M

                      = 4.625M

step 3 : D and A = EBITDA - EBIT

                           = 6.5M- 4.625M

                           = 1.375M