Patterson Brothers recently reported an EBITDA of $12.5 million and net income of $2.4 million. It had $2.0 million of interest expense, and its corporate tax rate was 40%. What was its charge for depreciation and amortization? Write out your answer completely. For example, 25 million should be entered as 25,000,000. Do not round intermediate calculations. Round your answer to the nearest dollar, if necessary.
Patterson Brothers recently reported an EBITDA of $12.5 million and net income of $2.4 million. It had $2.0 million of interest expense, and its corporate tax rate was 40%. What was its charge for depreciation and amortization? Write out your answer completely. For example, 25 million should be entered as 25,000,000. Do not round intermediate calculations. Round your answer to the nearest dollar, if necessary.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Concept explainers
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Topic Video
Question
100%
Transcribed Image Text:P MindTap HW 1 - Spring 2021 - Fi X
* MindTap - Cengage Learning
b I tried to do the question myself, X
8 https://ng.cengage.com/static/nb/ui/evo/index.html?deploymentld=590512258542108435051542&elSBN=9780357114582&snapshotld=22..
Chelsea v
CENGAGE MINDTAP
Q Search this course
A My Home
HW 1
Courses
eBook eBook
Patterson Brothers recently reported an EBITDA of $12.5 million and net income of $2.4 million. It had $2.0 million of interest expense, and its corporate tax rate was 40%. What was its charge
O Catalog and Study Tools
for depreciation and amortization? Write out your answer completely. For example, 25 million should be entered as 25,000,000. Do not round intermediate calculations. Round your answer to the
nearest dollar, if necessary.
A-Z
Partner Offers
$
3900000 x
EE Rental Options
dOffice
Hide Feedback
College Success Tips
Incorrect
Career Success Tips
Post Submission Feedback
Solution
EBITDA
$12,500,000
(Given)
You are eligible for a FREE 7-
day trial of Cengage Unlimited
or Cengage Unlimited
eTextbooks
Depreciation
EBIT
6,500,000
Deprec. = EBITDA - EBIT = $12,500,000 - $6,000,000
$6,000,000
EBIT = EBT + Int. = $4,000,000 + $2,000,000
Interest
2,000,000
(Given)
EBT
$4,000,000
2,400,000
2,400,000
Try for Free
(1-T)
0.6
Taxes(40%)
1,600,000
Taxes = EBT x Tax rate
Learn more
NI
$2,400,000
(Given)
Depreciation = EBITDA - EBIT = $12,500,000 - $6,000,000 = $6,500,000.
? Help
V Solution
Correct Response
O Give Feedback
eBook
Patterson Brothers recently reported an EBITDA of $12.5 million and net income of $2.4 million. It
$2.0
of interest expense, and its corporate tax rate was 40%. What was
its charge for depreciation and amortization? Write out your answer completely. For example, 25 million should be entered as 25,000,000. Do not round intermediate calculations.
Round your answer to the nearest dollar, if necessary.
2$
6500000
8:19 PM
O Type here to search
1/24/2021
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education