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...

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?

EBITDA = $7,500,000

Interest = 2,000,000

Tax = 0.04

Net income = 1,800,000

EBT = 1,800,000/(1-0.04) = 3,000,000

Depreciation + Amortization + Interest + EBT = EBITDA = 7,500,000

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