Hi,

I have a few questions:

1. JB Hi Fi spent $80 million in advertising expenses in the most recent year and expects these expenses to grow 2% a year in the future, if the home hardware division is not created. If the home hardware division is added to the company, the total advertising costs will be 10% higher than they would have been without the home hardware division each year from year 2 (the first year of sales for the division) for as long as the home hardware division is in operation.Am I supposed to calculate the advertising expenses for both (if the home hardware division is not created and if the home hardware division is added to the company) and put it in my calculation for EBIT? Or just calculate one of them based on my decision? How do you calculate the underlined part? I have trouble understanding it.
2. JB Hi Fi will allocate 10% of its existing G&A costs to the new division, starting in year 2. These costs now total $20 million for the entire firm and are expected to grow 5% a year in the long term. Specific to this project, it is expected that JB Hi Fi will have an increase of $1.5 million in general and administrative costs in year 2 when the new division starts generating revenues, and that this amount will grow with the new division's revenues after that. How would you calculate this assuming there is 13 years?

Thanks.