The CFO of an automotive part company has collected information to estimate the firms earnings for the next 5 years. The information available is as follows:

To build its new production line, the company is required to make a one-off investment of $44 million. It has a useful life of 5 years and a salvage value of $2 million at the end.

The estimated demand for the companys product is 20,000 units per year.

The sales price of the product will be $5,000 per unit.

Production requires 60 hours of labor per unit, and the estimated labor cost is $30 per hour. It also requires various parts and supplies that will cost $1,600 per unit.

The firm expects additional operating expenses, estimated to be $5 million per year. Answer questions a) and b) below. (Lecture notes pp.7-12)

b) Determine EBIT per year (NOT to multiply annual figures by 5 years)