Straight‑line depreciation base = 803 over 5 years → Depreciation each year = 160.6.
| Year | Incremental Revenues | Incremental Costs | Depreciation | EBIT | Income Tax @ 23% | Incremental Earnings |
|---|---|---|---|---|---|---|
| 0 | 0 | -51 | 0 | -51 | 11.73 | -39.27 |
| 1 | 562 | -131 | -160.6 | 270.4 | -62.19 | 208.21 |
| 2 | 562 | -131 | -160.6 | 270.4 | -62.19 | 208.21 |
| 3 | 562 | -131 | -160.6 | 270.4 | -62.19 | 208.21 |
| 4 | 562 | -131 | -160.6 | 270.4 | -62.19 | 208.21 |
| 5 | 562 | -131 | -160.6 | 270.4 | -62.19 | 208.21 |
Step 1
Compute EBIT each year: Revenues − Costs − Depreciation.
Step 2
Compute tax: −(Tax Rate × EBIT). Here Tax Rate = 23%.
Step 3
Incremental Earnings = EBIT + Tax.