Business, 23.06.2020 21:01 91miketaylor

Epiphany Industries is considering a new capital budgeting project that will last for three years. Epiphany plans on using a cost of capital of 12% to evaluate this project. Based on extensive research, it has prepared the following incremental cash flow projects: Year 0 1 2 3
Sales (Revenues) 100,000 100,000 100,000
- Cost of Goods Sold (50% of Sales) 50,000 50,000 50,000
- Depreciation 30,000 30,000 30,000
= EBIT 20,000 20,000 20,000
- Taxes (35%) 7000 7000 7000
= unlevered net income 13,000 13,000 13,000
+ Depreciation 30,000 30,000 30,000
- capital expenditures -90,000
1. The free cash flow for the first year of Epiphany's project is closest to:
A. $43,000
B. $25,000
C. $13,000
D. $45,000
2. The NPV for Epiphany's Project is closest to:
A. $4,800
B. $39,000
C. $13,300
D. $20,400

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Epiphany Industries is considering a new capital budgeting project that will last for three years. E...

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