Question
3. 5 years project is defined as it follows: Revenues are $645,000 the first year and will increase 3% per year for the next 4
3. 5 years project is defined as it follows: Revenues are $645,000 the first year and will increase 3% per year for the next 4 years. Fixed cost are $52,000 and they will increase 5% the first 2 years and will remain constant for the following years. Variable cost is assumed to be 8% of the Revenues. The initial investment is $800,000 Fixed assets are priced at $250,000 and they are depreciated linearly for 5 years with a residual value of zero. Taxes are 35% Calculate: a) Revenues per year b) Variable Cost per year c) Fixed Cost per year d) EBIT per year.
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