Straight‑line depreciation base = 1045 over 5 years → Depreciation each year = 209.
| Year | Incremental Revenues | Incremental Costs | Depreciation | EBIT | Income Tax @ 28% | Incremental Earnings |
|---|---|---|---|---|---|---|
| 0 | 0 | -33 | 0 | -33 | 9.24 | -23.76 |
| 1 | 604 | -155 | -209 | 240 | -67.2 | 172.8 |
| 2 | 604 | -155 | -209 | 240 | -67.2 | 172.8 |
| 3 | 604 | -155 | -209 | 240 | -67.2 | 172.8 |
| 4 | 604 | -155 | -209 | 240 | -67.2 | 172.8 |
| 5 | 604 | -155 | -209 | 240 | -67.2 | 172.8 |
Step 1
Compute EBIT each year: Revenues − Costs − Depreciation.
Step 2
Compute tax: −(Tax Rate × EBIT). Here Tax Rate = 28%.
Step 3
Incremental Earnings = EBIT + Tax.