=+1. The following investment project is submitted to you:

project: extension of an industrial plant;

purchase of equipment €20m;

set-up costs €1.5m;

useful life eight years;

residual value 0;

increase in working capital €2.5m.

The project will result in an increase in EBITDA of €3m per year, over the eight years during which the new asset is used.

The equipment is depreciated over five years. The corporate income tax rate is 40%.