Straight‑line depreciation base = 903 over 5 years → Depreciation each year = 180.6.
| Year | Incremental Revenues | Incremental Costs | Depreciation | EBIT | Income Tax @ 21% | Incremental Earnings |
|---|---|---|---|---|---|---|
| 0 | 0 | -80 | 0 | -80 | 16.8 | -63.2 |
| 1 | 542 | -124 | -180.6 | 237.4 | -49.85 | 187.55 |
| 2 | 542 | -124 | -180.6 | 237.4 | -49.85 | 187.55 |
| 3 | 542 | -124 | -180.6 | 237.4 | -49.85 | 187.55 |
| 4 | 542 | -124 | -180.6 | 237.4 | -49.85 | 187.55 |
| 5 | 542 | -124 | -180.6 | 237.4 | -49.85 | 187.55 |
Step 1
Compute EBIT each year: Revenues − Costs − Depreciation.
Step 2
Compute tax: −(Tax Rate × EBIT). Here Tax Rate = 21%.
Step 3
Incremental Earnings = EBIT + Tax.