Aqua ltd has a proposal for a project whose cost is Sh.50million and has an economic useful life of 5 years. It has a nil residual value. The earnings before depreciation and tax expected from the project are as follows:
Year Earnings before depreciation and tax
Sh.'000'
1 12000
2 15000
3 18000
4 20000
5 22000
The corporate tax rate is 30% and depreciation is on straight line basis.